- The global healthcare IT outsourcing market is forecast to reach $61.2 billion by 2023, according to the latest report by Transparency Market Research.
Demand for healthcare IT outsourcing services is being fuelled by healthcare providers’ need to achieve higher level of patient satisfaction, increased productivity, and reduced costs.
The IT administration segment is expected to lead the way, reaching $21.5 billion by 2023, due to increasing focus on healthcare data management, operations management, asset management, and billing. Vendors could also find demand in care management due to increasing requirements of quality care services and an expanding patient pool.
Regionally, North America is expected to take the largest market share in healthcare IT outsourcing, reaching $21.2 billion. The report forecasts that larger companies will build tactical alliances with local firms in the Middle East and Africa and Asia-Pacific to expand their market shares in those regions.
The report predicted that healthcare IT outsourcing companies will focus on offering quality patient care and patient data management systems as they develop their own analytical platform. This could also help them offer customized solutions to healthcare providers and payers.
At the same time, the report warned that loss of trust due to confidentiality issues and data breaches could dampen enthusiasm for healthcare IT outsourcing. Moreover, demand could also be restricted due to lack of IT platform standardization and high fragmentation of the healthcare industry. Additionally, language barriers and cultural differences could affect market growth.
A 2017 Black Book Research survey found that healthcare providers were growing dissatisfied with their IT outsourcing experience, but that frustration was not stopping them from outsourcing.
The majority of respondents said their frustration came from their IT managers not having enough experience to effectively manage their outsourced solution.
More than one-third of 807 hospital CIOs and 89 CFOs said they planned to increase their spending on IT outsourcing over the next two years.
At the same time, more than half of respondents said that they expect their usage of IT outsourcing to continue at current levels over the same time period.
Cerner was ranked as the top EHR among complex outsourcing solutions with only seven EHR vendors out of 68 receiving an “exceeds expectations” grade.
Slightly more than one-tenth of respondents said that they did not outsource because they wanted to keep their data on-premises to have more control over their applications.
A full 84 percent of respondents said that they experienced an increase in efficiencies and reduced costs from IT outsourcing, including outsourcing mission-critical applications and patient data, including EHRs.
Around 81 percent said that the return on investment was enough to keep their outsourcing partner, while 73 percent said that access to trained staff and needed technology were their primary reasons for outsourcing.
As more advanced IT infrastructure tools are introduced and more entities are competing for skilled IT administrators, the demand for skilled IT staff is increasing.
There are a limited number of administrators and developers with the needed experience, which spurs competition for these employees. Also, healthcare organizations are looking to cut back on IT spending and can’t afford to compete with other organizations for full-time staff.
A negative effect of outsourcing is that organizations that outsource their IT development and management staff can experience service interruption when contracts expire.
Contracts usually last about three to five years. When the contracts are up, there’s a bidding process for the next contract. This can result in the same outsourced staff renewing their contracts or new staff replacing them. I
If the current outsourced staff does not want to be replaced, they may make it difficult for another team to pick up where they left off. This may cause healthcare organizations to stay with one service provider if the transition is too difficult or time-consuming.
Overall, healthcare IT outsourcing can be an effective practice that enables organizations to get the best healthcare IT expertise at an affordable cost.