Amid ongoing pressure on resources, many health system leaders are constantly searching for opportunities to reduce costs and increase operational efficiency. Less than 20 years ago, only a quarter of U.S. hospitals had a health IT platform. Now, healthcare organizations spend $300 billion annually on software and software implementation, amounting to nearly 8% of all U.S. health spending. Between 2016 and 2020, IT costs for the average hospital grew by more than 5% per year. The tightening labor market and the need to implement a range of rapidly maturing technologies will only contribute to this trend. It is no surprise, then, that IT frequently finds itself in the budgetary crosshairs of health system leadership.
Benefits of information technology in healthcare
IT services are often viewed as little more than a support system: a necessary but regrettable cost that diverts funds from patient care. From this perspective, the goal for administrators is to maintain essential functionality at the lowest possible price point. However, this approach obscures the capacity for digital tools to improve patient safety and reshape and revolutionize health systems. To grasp technology's true potential, we should stop viewing IT as a commodity and instead embrace it as a tangible asset that can transform every part of the healthcare ecosystem. One way to achieve this differentiated perspective is through a managed services strategy.
IT as an asset vs. IT as a commodity
When health systems treat IT as a commodity, they often turn to traditional information technology outsourcing (ITO) as a solution to budgetary pressures. Key questions for assessing these services include: “How much can we save, and for how long?” But this approach has its costs. Maximizing short-term savings incentivizes a factory delivery model that sells homogenized IT solutions to as many industries as possible, making it hard to get healthcare-sensitive responses. This lack of specialization can introduce new frictions and inefficiencies that are rarely accounted for at the client level. On the other hand, locking in like-for-like capacity over the medium to long term freezes capability in time, limiting opportunities to innovate and preventing health systems from tapping new sources of value in the rapidly evolving technology landscape.
While reducing immediate costs has an obvious attraction, health systems need to balance this goal against other priorities. A recent Gartner® survey found that 64% of healthcare providers see driving operational excellence as their primary digital ambition. With big tech players and start-ups powering innovation at a pace that healthcare has never seen before, a wide range of transformative technologies are reaching the point where they can support clinicians and health systems in getting more done with less. Big data analytics, generative AI, and machine learning are just some of the areas that have the potential to revolutionize the way healthcare providers work. However, the healthcare industry tends to lag behind other sectors in the speed of its digital adoption, meaning staff and patients may have the best of what healthcare technology and services can provide.
The best of both worlds
So, how do we tilt the needle back toward innovation and existing solution maturation without blowing the budget? The answer is to flip the script. By treating IT as a key asset and integrating it into the healthcare enterprise through end-to-end managed services, we can start to realize the value locked away by current approaches.
Instead of prioritizing the greatest short-term savings, healthcare providers should partner with healthcare IT consulting companies that can help secure the greatest possible total value for their systems over time. Better automation, actionable analytics, and top-notch services will enable providers to elevate care quality, minimize waste, decrease costs, and streamline workflows in the long term, improving efficiency and reducing the labor pains plaguing the industry.
To achieve the best of both worlds, a comprehensive managed services program needs to bring three distinct elements of service together into a single balanced whole:
- Centers of scale: Certain services, like network management and service desks, can be outsourced safely, creating opportunities for savings without negatively impacting quality and innovation. Deploying appropriate centers of scale involves finding the right locations for specific services, with the necessary infrastructure and talent pools to support scaling up and down, and adding new services and capabilities as needed.
- Centers of performance: Regardless of cost, services that fail to perform adequately are not fit for purpose. Building comprehensive managed services around centers of performance means matching scale, location, and personnel to evolving operational needs, and connecting appropriately skilled, knowledgeable, and scalable teams as part of a seamless global network.
- Centers of excellence: Viewing IT as an asset involves building services around the specific needs of healthcare providers. The EHR is a foundational tool and a critical touchpoint that connects clinicians, patients, and the broader healthcare system. Technology can be matured, tuned, and transformed in a way that meets the user's needs only when managed services teams connect with clinicians, clinical informaticists, and other points of contact on the ground.
A commitment to excellence also means recognizing that proximity has value. Physical and personal distance undercuts the ability for certain services to evolve and grow with an organization. Keeping key teams physically close and tethered to the business operations is essential for a human- and healthcare-centric outlook.
When IT is treated as an asset, it can deliver enormous value to healthcare organizations. Realizing the true promise of technology requires a scalable, end-to-end, healthcare-focused program that’s committed to excellence. With the right managed services partner, healthcare organizations can achieve operational excellence, unlock productivity, and deliver better service experiences for every stakeholder.
Want to continue exploring how digital solutions can help your organization optimize clinical, operational, and financial outcomes for long-term success? Read Nordic’s white paper, “Scaling value through managed services: Shifting health IT from an expense to an asset.”