Cost-cutting Measures make Outsourcing IT Services an Attractive Option

Healthcare administrations that aim to cut costs and increase operational efficiency to spur profits are finding the ideal solution in the outsourcing of IT services. Tight budgets, escalating capital expenditure, staffing shortages, and larger patient volumes are contributing to the popularity of third-party IT experts that ensure effective functionality. The scale and error-free productivity of IT applications allow healthcare professionals to concentrate on clinical care, workflow efficiency, and business productivity. Although about 4.0 to 6.0 percent of total revenues within healthcare organizations are dedicated to IT spending, this is expected to increase as the tangible returns on outsourcing IT services and the mounting financial pressures continue to be strong drivers in this market.

This new research service from Frost & Sullivan examines the current state of the U.S. IT outsourcing markets for healthcare and contains unit shipment and growth forecasts for each segment. This analysis provides vendors with strategic insights into outsourcing integration opportunities within individual healthcare markets. It provides specific information on the functionality, applicability, and benefits per IT outsourcing service. An analysis of the market by end-user applications highlights the potential target market size. In-depth strategies that aid market penetration and address each individual challenge are also included.

Lack of In-house Healthcare IT Expertise Expands User Base

Hospitals do not have the infrastructure or the manpower to successfully manage IT operations, resulting in a greater demand for third-party IT services. Budgetary pressures do not allow the incorporation of in-house IT staff and a large IT specific turnover rate of approximately 17.0 percent has left many small to mid-sized healthcare systems in need of outsourced IT services. "By incorporating third-party services, healthcare organizations immediately save on the time and capital associated with the hiring and continual training of in-house IT professionals," says the analyst of this research service.

Additionally, clinical staff need not waste time on operating IT applications and handling technical complications. "Outsourcing IT functions to experts will increase the organization’s efficiency by decreasing extraneous costs and improving workflow efficiency of healthcare workers," adds the analyst.

An Increase in Federal Regulations Spurs Market Demand

With the Health Insurance Portability and Accountability Act (HIPAA) currently in effect, hospitals are under constant scrutiny for compliance regarding privacy of patient information. As increasing volumes of patient healthcare sensitive information are stored and accessed electronically, upholding the privacy, security, and integrity of medical records is a productive and financial drain. In addition, the federal penalties for HIPAA breaches as well as the financial liability could wreak havoc on a hospital system.

The cost-effective method of outsourcing regulatory compliance monitoring services eases this burden, allowing healthcare professionals to concentrate on their core competencies. Since organizations can avoid the severe penalties associated with failure to meet HIPAA regulations, this market is expected to enjoy steady growth in the next few years.