The short answer is an emphatic YES, but the long answer involves understanding just what that value really is. This study will discuss some of the internal value to healthcare providers surrounding outsourcing some or all of their IT functions. Bain and Co. did a study of the top areas to outsource for healthcare providers and of the top four was the was outsourcing some or all of the IT functions. It found that only about 25% of SMB healthcare providers were able to achieve sustained growth in the long term. The one activity that set these winners apart: Finding ways to outsource functions that are not core to the business! This almost always led to greater profitability and higher valuations.
Healthcare Practices today that see their overhead increasing faster than their revenue base should determine what portion of the practice operating budget is increasing the most and what part of the operations can be outsourced most efficiently and cost effectively.
The bundle of administrative functions a practice should consider outsourcing includes billing, RCM, credentialing, IT, bookkeeping, software hosting, coding and tracking clinical outcomes. Owning and paying for the IT infrastructure for the practice management software is difficult and costly.
As demands on the practice increase with the Affordable Care Act and other performance-measure reporting, it makes sense for a practice to outsource software deployment and hosting to the clinician’s IT networks. Independent practices are suffering financially due to increased overhead and decreased reimbursements. It is difficult to provide an affordable IT infrastructure as demands for a greater level of security and sophistication grow.
In many practices, the answer is the business office and information technology (IT)/connectivity services. If these costs are increasing faster than the rest of the practice expenses, including personnel, and the complexity of managing the infrastructure pieces is getting too complicated, it is time to consider outsourcing your IT.
Healthcare organizations that are searching for ways to improve performance with limited resources are embracing a balanced approach to outsourcing. Called “Right-sourcing” or “Right Sizing” means putting aside preconceived notions that certain services should always be maintained in-house or outsourced. Right-sourcing decisions looks beyond cost savings to consider quality and expediency as well as the organization’s overall business plan.
According to Black Book research, healthcare providers are overwhelmingly turning to third parties to outsource IT needs. As its 2015 survey of 1,030 hospital IT leaders found, almost 75 percent of health organizations that boast more than 300 patient beds (and more than 80 percent of providers with fewer than 300 beds) have shifted their focus to IT outsourcing for services such as Desktop and hardware support, software development and infrastructure.
Perhaps the most convincing argument from the survey came from the 600 respondents who were either former or current IT outsourcing users: Ninety percent said they were either at or near full returns on their investments within three months, if not sooner.
According to a 2016 Deloitte Survey, 59% of respondents outsource IT to cut costs, and 57% outsource to focus on core business. (This is where removing menial IT tasks from your employees’ agendas comes in.) Further, more than 80% of respondents noted that outsourced IT services added value in business. Participants felt positive about their respective outsourcing relationships. The proof is in the pudding. So, when it comes to outsourcing for your medical practice—whether for IT management, billing processes, etc.—the benefits are obvious. It not only frees up your employees’ time to work on the tasks they were hired for, but it also unkinks your cash flow.
Outsourcing may seem counterproductive because it feels like you’re hiring a new employee, but once you get the third-party firm in place, you’ll see the benefits. It is easy to get caught up in the excitement of a new partnership, and there may be issues. Be ready for them and be proactive. Freeing up your skilled people—your superstars—to do their jobs with excellence will allow your business to thrive. Don’t waste your time and talent on the little stuff. Outsource your IT, and your practice will reap the rewards.
BOTTOM LINE: The overall patient experience can be enhanced by technology. By outsourcing things like computer services, such as software development, storage and desk top support, a healthcare facility can improve efficiencies, manage costs and significantly improve profitability.Contact us today to find out how to increase your valuation through IT Outsourcing