The search for cost savings has been a constant, but the need for efficiency has a new urgency in the wake of the COVID-19 pandemic. With the Big Squeeze on resources putting pressure on health systems, cutting IT costs is increasingly seen as a way to redeploy resources to the front lines of care. Less than 20 years ago, only a quarter of U.S. hospitals had a health IT system. Now, healthcare spends $300 billion a year on software and software implementation alone, 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 seen as little more than a support system: a regrettable but necessary cost of doing business that siphons funds away from the core task of providing patient care. From this perspective, the goal for the conscientious administrator is to maintain essential functionality at the lowest possible price point. But this approach obscures the benefits of information technology in healthcare, the impact of health information technology on patient safety, and the unique capacity of technological innovations to reshape and revolutionize the way health systems work. If we want to grasp the true potential of technology, we need to stop seeing IT as a commodity and instead embrace it as a real asset that can transform not only how care is delivered, but the healthcare industry as a whole. A healthcare IT managed services strategy is one way to achieve this differentiated perspective.
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What is a managed service provider?
An IT managed service provider can help organizations build, implement, and evolve applications and technology. These healthcare IT consulting services can include application management support, updates and additions to common master files, testing and upgrade management, training, data analytics and reporting, and service desk.
IT as an asset vs. IT as a commodity
When health systems treat IT as a commodity, they often look to traditional information technology outsourcing (ITO) as a solution to their budgetary “problem.” Key questions for assessing these services include “How much can we save, and how long can we fix that saving for?” But this approach has costs of its own. On the one hand, maximizing short-term savings puts a premium on scale, incentivizing a factory delivery model that sells homogenized IT solutions to as many industries as possible. This lack of specialization and integration can make it hard to get healthcare-sensitive responses, introducing new frictions and inefficiencies at the client level that are rarely accounted for when assessing the cost of the service. On the other hand, the static model of locking in like-for-like capacity over the medium to long term freezes capability in time. This limits opportunities to innovate and prevents health systems from tapping new sources of value in the rapidly evolving technology landscape.
“If we want to grasp the true potential of technology, we need to stop seeing IT as a commodity and instead embrace it as a real asset that can transform not only how care is delivered, but the healthcare industry as a whole.”
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 main 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 now reaching the point at which they can support this goal. 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. But the healthcare industry has tended to lag behind other sectors of the economy in the speed of its digital adoption, and this translates to staff and patients missing out on the best of what healthcare technology and services could be providing.
The challenge for health systems is to find ways to keep up with the pace of change while at the same time coordinating a growing field of tech vendors to apply these advances effectively. This will only be possible if we leave the commoditized view of IT behind once and for all, acknowledging that a narrow focus on short-term savings pulls the rug out from underneath medium- and long-term growth. To unlock the true potential of new technology, we need to see IT costs not as an unwelcome burden but as an investment in the future.
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 we need 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 saving, healthcare providers should be looking to partner with healthcare IT consulting companies that can help secure the greatest possible total value for their systems over time. Better automation, better analytics, and higher-quality services will enable providers to deliver more with less in the long term, improving efficiency and reducing the labor pains that are plaguing the industry. At the same time, a measured approach to the advantages offered by scale and geography can still deliver some immediate savings, even if these aren’t at the level that a commodity-driven approach might claim.
Why choose managed IT services?
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, prioritizing and bucketing these services based on the health system’s unique challenges.
- Centers of Scale
Certain services, like network management and service desks, can be outsourced safely without having a negative impact on quality and innovation. And where there are opportunities for making savings, these should be taken. But harnessing the power of scale doesn’t mean simply moving services to the cheapest parts of the globe. 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 services that 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 the appropriately skilled, knowledgeable, and scalable teams together as part of a seamless global network. This might mean using more costly near shore or onshore locations for key services that cannot be delivered adequately and with the necessary degree of flexibility elsewhere.
- Centers of Excellence
Viewing IT as an asset involves building services around the specific needs of healthcare providers. The EHR isn’t just another part of IT infrastructure: it’s the foundation for everything and a critical touchpoint that connects clinicians, patients, and the broader healthcare system. It is only when you connect managed services teams with clinicians, when you have clinical informaticists and other points of contact on the ground, that you can mature, tune, and transform systems in a way that really meets the needs of the user. Placing the EHR at the heart of the digital transformation program and building out from this center ensures that IT infrastructure and delivery is tailored to the needs of healthcare providers and patients, now and in the future.
“Realizing the true promise of technology requires an end-to-end program that is designed for healthcare, committed to excellence, and arrives at scale.”
A commitment to excellence also means recognizing that proximity has a value all its own. Physical and personal distance undercuts the ability for certain services to evolve and grow with the organization, so keeping key teams physically close and highly tethered to the sharp end of the health system is essential for a human- and healthcare-centric outlook. With the right teams in place on the ground, an ongoing campaign of continuous improvement can standardize, automate, and enhance processes to leave providers materially better off as time passes, rather than freezing capabilities on day one.
When IT is treated as an asset, it can deliver enormous value to healthcare organizations. But that vision cannot be achieved by imposing industry-agnostic solutions onto a complex sector with specific needs. Realizing the true promise of technology requires an end-to-end program that is designed for healthcare, committed to excellence, and arrives at scale. A shared-services approach yields cost savings out of the gate, from scale, from industry-specific efficiencies, and from the ability to flex services up and down as needed. But the real payoff comes from increased operational efficiency and quality. The longer-term value this model unlocks creates a virtuous circle, freeing the resources needed to drive an ongoing technological transformation that can keep up with the current unprecedented pace of change.