Compare Outsourcing VS Managed IT Services in Healthcare

Article Summary

Healthcare provider organizations are looking for opportunities to alleviate pressure from today’s labor and financial crisis. Some may generate a competitive advantage by lowering costs, elevating technology and data insights, and improving care quality through strategic employment arrangements. Leading health systems have reduced labor costs with tech-enabled efficiencies and without cutting people or performance.

Through Tech-Enabled Managed Services (TEMS) by Health Catalyst, clients alleviate financial pressures through a guaranteed pathway to cost savings. To rescue hospitals from their financial struggles, outsourcing strategies must also mitigate quality risks associated with traditional workforce reductions.

With financial guarantees and a proven approach towards employee care, the TEMS framework provides immediate relief in labor costs through a managed services partnership that drives efficiencies over time without the typical compromises inherent in traditional outsourcing options.


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In recent years, the healthcare industry has undergone a significant transformation with the rise of outsourcing and managed IT services as a strategic solution for various operational processes. Traditionally, however, contracting out was driven by cost-cutting measures and productivity enhancement.

Yet, a new model better known as managed IT services has emerged that prioritizes employees’ well-being while achieving efficiency and organizational success. This approach challenges traditional perceptions about outsourcing and promises to revolutionize how healthcare organizations manage their workforce and deliver quality care to patients. This comes at a time when clinical and administrative leaders are navigating a complex terrain where employee recruitment and retention in healthcare are unusually challenging.

The healthcare industry is experiencing a drastic uptick in labor costs, particularly in non-clinical roles such as healthcare data analytics. Estimates suggest that non-clinical labor costs will rise by $77 billion in 2024.

Moreover, health systems are facing additional hurdles due to heightened competition for technology-related positions like managed IT services. Indeed, tech giants like Google, Microsoft, and Apple are luring top talent with competitive compensation packages and appealing remote work options, making it harder for health systems to attract and retain skilled professionals.

Compare Outsourcing VS Managed IT Services in Healthcare - Health Catalyst
Image Credit: McKinsey analysis in partnership with Oxford Economics; expert input

To stay ahead in technology advancement and overcome labor shortage difficulties, healthcare provider organizations may benefit from outsourcing strategies. However, not all outsourcing solutions are created equal; there is a risk of detrimental impacts on company culture or delays in economic and quality outcomes if approached haphazardly. Therefore, hospitals must adopt a strategic approach to outsourcing while partnering with a solutions provider that prioritizes the well-being of employees.

Workforce Shortages and How Managed IT Services Is the Solution

The global workforce shortage poses a significant challenge for healthcare provider organizations. Specifically, health systems struggle to hire and retain qualified information technology professionals for roles such as system maintenance, IT support, clinical data analytics, and systems development. Staffing gaps in these areas lead to widespread issues in remediating technology disruption or downtime consistently and promptly. This dearth of staff contributes to three persistent labor challenges for hospitals including:

  1. Resourcing. Organizations must source potential new hires from a pool of less qualified applicants, who often demand higher salaries than their predecessors.
  2. Healthcare industry expertise. Hospitals face tighter timeframes for delivering data analytics value as program leaders seek real-time analysis and faster results.
  3. Limited IT staffing options. Contracting roles or traditional outsourcing may not guarantee individuals with a healthcare background will fill positions. Yet, deep healthcare knowledge and expertise are necessary for conversations with stakeholders such as payers and providers.

Technology and Labor Costing Challenges in Hospitals

Widespread cost pressures, workforce shortages, wage increases, revenue pressures, reimbursement declines, and unpredictable patient flows converge on health systems. Technology services also contribute to the overall expenses of any organization. Unfortunately, budgeting is incredibly challenging because IT department costs are often unpredictable due to rapid technological advances.

This leads many executives to question whether outsourcing is inevitable. There are several concerns that leaders must address:

  • Is cost the sole factor driving this decision?
  • Worry about the consequences of outsourcing.
  • Cutting costs may diminish our quality performance.
  • Outsourcing could harm our employees, reputation, or community presence.
  • Outsourcing may be detrimental to organization’s mission.

Health systems may lack sufficient human capital and tools necessary for optimizing performance, reducing labor costs, and sourcing talent, making labor option alternatives a necessity. Finding the right IT and healthcare partner who aligns with the organization’s mission is crucial for the success of the employment solution. Fortunately, healthcare provider organizations find that Tech-enabled Managed Services by Health Catalyst (TEMS) offers an alternative approach to outsourcing that immediately alleviates performance concerns and provides an accountability partner.

Managed IT Services Is Not Your Average Outsourcing

TEMS provides a fail-safe route to generating labor cost savings without resorting to personnel cuts or compromising performance. Clients are drawn to TEMS because of its holistic and balanced approach. Health systems realize several enhancements by targeting cost reduction, quality improvement, and technology-driven insights. These include:

  • Optimizing IT resources to streamline focus on clinical priorities.
  • Boosting efficiency and effectiveness of IT operations.
  • Mitigating the risk of IT downtime and data breaches.
  • Ensuring compliance with industry regulations.
  • Bolstering the reliability of patient data.
  • Supporting health equity, population health management, and enablement.

 By identifying and prioritizing high-cost or problematic capabilities, then standardizing, automating, and consolidating, healthcare organizations can achieve reduced labor costs and improved quality and productivity.

How a Managed IT Services Framework Works in Healthcare

In this partnership, the healthcare provider organization delegates oversight for a functional area — spanning people, technology, and processes—to Health Catalyst. In return, Health Catalyst delivers the desired outcomes-as-a-service in an efficient and cost-effective approach to outsourcing.

TEMS enables each partner to focus on their core strengths while simultaneously providing clients with much-needed financial relief in the near and long term. This unique arrangement not only safeguards the well-being of employees but also aligns with the organization’s fundamental mission while fostering performance improvements over time.

The TEMS-managed IT services framework offers a range of applications that have proven beneficial for healthcare organizations, including the following:

Chart abstraction. TEMS increases the value of registry participation. By informing quality improvement opportunities with access to reliable and timely abstracted data, organizations support their quality improvement efforts while meeting registry requirements. Tech-enabled efficiencies are created through data queries that reduce abstraction labor, registry, clinical program, and average LOS costs.

Data analytics and reporting. Relying on a partner for specialization in data reporting and analytics enables the healthcare organization to gain efficiencies and scalability of reporting, assess the quality and speed of analytics, measure adoption and usability of data, and progress towards high-value analytics. TEMS elevates data as a strategic asset to improve outcomes across the organization that span quality, safety, cost, financial, patient, and team member experiences.

Other tech-enabled services. TEMS can enable healthcare organizations to minimize the impacts of budget shortfalls and help stave off staff reductions while maximizing technology investments by transferring other functions, such as:

  • Electronic data warehouse and data operations.
  • Ambulatory support operations.
  • Performance and/or Quality Improvement teams.

“Cultivating employment options is more than a technology endeavor; it is a profound transformation at Carle Health. We chose Health Catalyst and TEMS to expedite our analytics capabilities and empower our workforce to advance in their careers.”

– Phillip Rowell, MJ, former Vice President of Clinical and Business Intelligence at Carle Health, who is currently serving as Chief Analytics Officer at Health Catalyst.

A Managed IT Services Approach for Employee Welfare

Outsourcing arrangements typically involve replacing roles within organizations without prior notice or consideration for employee well-being. Traditional outsourcing also often leads to an us-versus-them mentality between outsourced employees and in-house staff due to a lack of communication or integration.

However, there are better approaches for a health system to outsource while maintaining employee engagement. Managed service providers who prioritize company culture as part of their service offering can ensure seamless collaboration between teams regardless of location or employment relationship.

This inclusive approach fosters cultural alignment across the workforce, building teamwork, innovation, and loyalty.  Within a TEMS outsourcing model, team member benefits are as follows:

  • More competitive compensation and benefits package.
  • Access to a network of team members who have expertise in the same line of work.
  • Access to new technologies and training to elevate contribution levels.
  • More opportunities for career advancement and growth.
  • Exposure to new opportunities to apply skills across various clients.
  • Specialized professional development opportunities.

Managed IT Services Exceeds Traditional Outsourcing Solutions in Healthcare

In summary, a managed IT services framework:

  1. Prioritizes care for individuals and the team.
  2. Ensures a guaranteed pathway to cost savings.
  3. Drives automation and efficiency through the appropriate use of advanced technologies.
  4. Helps products and services yield better outcomes for clients.

Leveraging technology-enabled efficiencies gives organizations a competitive edge in navigating complex labor market dynamics like escalating workforce costs, shortages of skilled professionals, and resource allocation challenges.

As technology advances and becomes increasingly integrated into healthcare practices, this new model promises to redefine traditional roles and empower patients and providers. By putting employee welfare first in the outsourcing equation, TEMS also addresses historical concerns surrounding outsourcing in healthcare while driving positive change within the industry.

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