Why Companies Should Consider Health IT Outsourcing

by | Jun 10, 2019 | Healthcare

Reading Time: 4 minutes

In the world of value-based reimbursement, health system CFOs are finding it harder and harder to deny the cost-saving and quality improvement opportunities of health IT outsourcing. According to a Zion Market Research, this market is expected to reach $73 billion by 2024 with a CAGR of 6.5%.

Along with value-based incentives to drive down costs, the health IT outsourcing market will be driven by a widespread lack of IT infrastructure and trained professionals in the healthcare space. Let’s take a look at the benefits, process, and challenges facing this growing industry.

Benefits of outsourced IT

Reduce costs: The costs of hiring internal workers is often higher than bringing in an outside contractor. When using their own employees, providers must tack on benefits, payroll taxes, and other requirements. This extra burden is not required from an outsourced IT firm. In addition, the firm is better equipped to finish the job quickly and efficiently compared to internal workers who may be unfamiliar with the new technology.

Scalability: Utilizing outside IT support allows a provider to adapt quickly to changes in technology or customer demand. In each case, the hospital is able to shift its process in a way that limits capital investment compared to a solo venture. From a technological perspective, switching between services demands new software or hardware and the learning curve could be very steep. Outsourced IT professionals are completely focused on this transition and make the process far smoother. If a provider experiences a large burst in consumer demand, IT-focused companies are better equipped to meet the changing need because economies of scale have been created. These IT specialists know best practices to adapt to change and likely have prior experience with the specific demand shift from other cases.

Reliability: Healthcare organizations cannot match the hours of on-call availability that outsourced IT services provide. Hospital IT workers are often limited by a 9 to 5 schedule but the technology they facilitate demands around-the-clock attention. Outsourced IT services are better able to deal with a problem if it occurs outside of regular working hours.

How to make the buying decision

Choose a trustworthy partner: Trust and partnership are vital to the outsourcing decision. A strong personal connection between provider and IT specialist is essential when the inevitable problems begin to occur. A connection that is only built over the phone or email will eventually fall apart when things matter most. To better prevent problems in the first place, an IT solution company must be a partner and not just a vendor. This distinction means proactive decision-making from the outsourced organization to improve a provider’s system and not service the bare minimum.

Define KPIs: Once a trustworthy partner is found, a healthcare provider must agree upon a clear path that the relationship will follow. The foundation of these agreements are SLAs but beyond this the two organizations must come together to work out best practices, like how to handle technological change. If these two steps are met, a provider will be best equipped to deal with IT challenges in the short-term and avoid them in the long-term.

Challenges of health IT outsourcing

Disillusionment: The IT professionals within a healthcare organization must be connected to their department during the transition to avoid resentment. These professionals are liable to feel kicked to the curb by an outsourcing initiative. To avoid this issue, a healthcare organization can communicate clearly that the outside company will largely be doing more repetitive or boring IT jobs and that their roles are still valuable.

Poorly managed expectations: A failure to communicate between provider and vendor can lead to serious issues with the outsourcing handoff. If there is a gap between health-side expectations and IT capabilities, there is a high likelihood of costs skyrocketing and satisfaction plummeting.


It is clear that the pros outweigh the cons when it comes to health IT outsourcing. The pitfalls of the process can largely be worked out through good management and people skills. An upside of reduced costs, greater scalability, and increased reliability is too tempting to turn down.

Healthcare Technology




Teddy Craven

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