Health systems continue to face significant financial challenges as they contend with inflation, workforce issues, and low margins. The environment is forcing many to rethink operations, including IT. This article explores the benefits managed services providers offer to health systems that externalize aspects of IT operations. By taking this approach, health systems can realize cost efficiencies, optimize labor management and resourcing, and enhance service quality.
Where to Start
While some health systems already have or are considering a full externalization of their internal IT function, the vast majority are taking a more surgical approach. When considering IT managed services, the process begins by evaluating core competencies and identifying areas where internal IT expertise does not offer a strategic advantage or critical differentiation. It is important to consider staffing stability as well, as IT operational areas with high attrition rates often are likely candidates for managed services. Health systems also need to assess the risks associated with externalization, such as data security, privacy, compliance, and potential service disruptions. Typical IT functions that are well-suited for managed services include service desk operations, application management and support, technical support, reporting, and provisioning.
Realizing Cost Efficiency
External IT managed services allow health systems to gain cost efficiencies through both cost certainty and cost savings. Cost certainty is becoming more important for systems to accurately predict IT operations expenses. When IT operations are handled in-house, expenses fluctuate due to staffing, attrition, supporting equipment needs, and other factors, and therefore, are challenging to accurately predict and budget. By partnering with a managed services provider, health systems benefit from negotiated fixed pricing structures based on defined services and agreed-upon service levels. Cost savings are driven by leveraging partner economies of scale, cost sharing, and access to specialized expertise, particularly when it is only required on a fractional basis. The combination of certainty and savings yields efficiency and reduced overhead costs.
Addressing Labor Challenges
Pandemic induced labor challenges such as high attrition rates and wage inflation remain persistent and put significant strain on internal IT departments. Thoughtful externalization of IT functions enables health systems to offload these challenges by tapping into the expertise and capabilities of specialized service providers. HR and IT leaders are relieved from intensive time and resource consuming efforts related to employee lifecycle management, including recruiting, onboarding, training, retention, performance management, and offboarding. Systems that couple internal teams with external resources have greater flexibility to scale operations up or down based upon changing needs. Lastly, leveraging managed services enables effective resource allocation, allowing internal IT teams to focus on the most impactful strategic initiatives.
Improving Quality and Service Levels
Partnering with a managed services provider results in improved IT quality and service levels. Specialized expertise, stable staffing, and best practices offered by external partners contribute to this enhancement. Managed services partners typically have well-defined service level agreements (SLAs) that outline performance metrics and penalties for non-compliance. These SLAs contribute to cost certainty by ensuring that service providers deliver on their commitments and maintain a high level of operational performance. Additionally, managed services providers often offer value-added services, such as process optimization, reporting, and data analytics, driving opportunities for continuous quality improvement and innovation.
Conclusion
Externalizing specific aspects of IT operations enables health systems to achieve cost efficiency, address labor challenges, and improve quality. By achieving financial efficiencies, optimizing workforce management, and enhancing service levels, health systems can effectively navigate current market challenges while enhancing focus on their core mission of providing excellent patient care and health outcomes.
