New Research Finds Hospital IT Departments Frustrated with Outsourcing Options: Shift to As-a-Service Solutions

Healthcare market research agency Black Book surveyed 1,587 hospital IT professionals to determine their confidence in partnering with outside contractors.

They are not happy.

39% of CIOs and technology managers described their outsourcing experience as “below expectations.” Out of 68 IT outsourcing partners identified in the survey, only 7 were described as “exceeding expectations.”

You’d think hospitals would simply change vendors, right?

It’s not that simple.

Hospitals are scrambling to find a viable partner. 82% of hospital IT departments have signed new outsourcing contracts since Q3 2016, or are in the process of vendor selection.

The implausibly high turnover rate suggests that healthcare IT managers rotate between the 68 vendors identified in the survey, trying desperately to find the right specialization to match their needs.

The turnover also signifies a much larger issue; that vendors have not adapted to meet the needs of healthcare. The survey found that “the most common outsourcing benefits sought by CMIOs [are] time spent on infrastructure [and] the ability to focus on the health system’s core business.”

In fact, 77% of CMIO responders were the most frustrated when having to manage a vendor with limited experience in healthcare operations.

IT is confused about its role in healthcare,

which is an industry that has experienced one of the fastest transformations of our time. Value-based care and as-a-service approaches have morphed health IT into a responsive-above-all environment.

Traditional outsourcing models do not fit today’s healthcare environment. Many IT companies employ armies of people to do specific technology work, often referred to the “heads-on-sticks” approach. This method of outsourcing only focuses on technology; not business implications, not operations, and not the solution.

A hospital who hires a vendor to enhance a Pega-based system will not receive a Pega solution. They will get Pega workers who only know the technology, limiting their contribution.

XaaS is replacing traditional models.

In Europe, traditional outsourcing spend has decreased by 43% in the past three months. It’s being replaced by as-a-service and connected enterprise solutions (of which spending has increased by 48% at the same time).

Here, in the US, outsourcing costs have also increased despite the lack of vendor operational knowledge, driving a similar movement to cloud and other As-a-Service models.

The vendor’s new role is connected to the whole enterprise;

responsiveness, data management, change management, and business and operational process competence are what matters.

AgileThought found that a rounded partnership model – supporting hospitals in their broader mission and offering strategic support – moved digital transformation agendas forward while significantly cutting costs (by 40% on average).