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It's hard to open a healthcare publication or attend a seminar these days without reading or hearing about the advantages of IT outsourcing, often including testimonials from satisfied providers who have outsourced their IT function. Today, hospitals are on such tenuous financial ground that outsourcing IT is tempting for many CEOs and CFOs. However, many organizations that have outsourced IT have encountered problems that are rarely mentioned in articles and seminars.
Point/Counterpoint
Let's look at the main rationales Healthcare executives cite for outsourcing, accompanied by potential flaws in each rationale.
Point Healthcare organizations need to focus on so-called core competencies-such as providing high-quality patient care-and not be distracted with the burdens of overseeing rapidly changing computer technology.
Counterpoint The vast majority of hospitals have overseen IT for more than three decades, so why is IT no longer a core competency? With the advent of computerized physician order entry and electronic health records, IT is as core to patient care as any other hospital department.
Point There is a dearth of leadership of IT departments today.
Counterpoint If your CIO is weak, counsel him or her, and if the CIO doesn't improve, find another one. A hospital wouldn't outsource finance because of a weak CFO.
Point Hospital IT staffs typically lack up-to-date technical knowledge or have gaps in skills.
Counterpoint. Knowledge and skill gaps should be addressed by increased training and improved CIO leadership. Hospitals routinely address such gaps in other departments through training.
Point. Outsourcing can reduce the significant costs associated with IT.
Counterpoint. Outsourcing can add a vendor's profit margin to your IT payroll expense, thus increasing IT costs.
Point. Outsourcing allows a hospital to take a major leap forward with core system technology.
Counterpoint. Hospitals have shown their ability to make major leaps forward in technology in their work to address the challenges of Y2K and HIPAA.
Po/nf. Outsourcing can turn around unsatisfactory service levels associated with the current IT function.
Counterpoint. Hospitals are fully capable of improving service by working with department management and staff. For example, hospitals have used patient satisfaction results to improve departments such as nursing and dietary for years.
Hospitals should be wary of sales pitches that emphasize these rationales for outsourcing IT1 and they should not assume...