The business case for outsourcing information technology in healthcare hasn't sunk in, not the way it has in other industries. Sure, a handful of deals involving high-profile healthcare systems has raised consciousness about the outsourcing alternative during the past year, but there's no rush to emulate that management option (p. 4).
At first it doesn't seem logical to dismiss IT outsourcing given the market pressures, strategic plans and operational woes an executive has to deal with these days. Vendors stress outsourcing's ability to bring expertise to the operation and improvement of information systems, allowing providers to concentrate on care instead of computers.
But as long as vendors package and sell outsourcing as a technological 'solution' unto itself, they won't get the attention of senior executives who are seeking solutions to problems in an entirely different context, some execs tell Eye on Info. In general, chief executive officers have their own A-lists of pressing concerns closing in on them from all sides, and it's a good bet that information systems management is not one of them.
A recent conversation with one prominent healthcare CEO, Reginald Ballantyne of PMH Health Resources in Phoenix, took stock of the healthcare landscape the way decisionmakers see it. Ballantyne, a former American Hospital Association chairman, says talks with colleagues confirm that issues of basic survival and viability predominate. He rattled off several: severe reimbursement cutbacks, increasingly thorny managed-care challenges, 'the most severe nursing shortage in memory,' claims-payment delays and the search for sources of capital, primarily to replace medical equipment.
Looking ahead, many executives plan for: disposal of institution-owned physician practices, coupled with the need to build new bridges between hospitals and physicians; other strategic partnership initiatives; deciding which lines of business to maintain; restoring public confidence in hospitals, particularly in light of medical-error reports.
These problems serve as 'distractions' that prevent executives from locking onto the issue of information technology outsourcing, Ballantyne says. (In his case, those distractions progressed to the extreme: PMH on Feb. 1 announced that it filed for Chapter 11 bankruptcy and reached agreement to sell its assets to Vanguard Health Systems of Nashville for $39 million in cash and assumption of debt.)
Although outsourcing is not likely to be among the top issues for executives, each item on their short list likely can be matched in some way to an IT-related remedy -- not as some magic solution, but as one big gun in the arsenal of management ammunition. 'It may well be that executives should start seeing outsourcing not as yet another distraction, but as potentially responsive to current pressing needs,' Ballantyne says.
To drive that distinction home, outsourcing has to be represented as a means to provider ends. That's what this issue of Eye on Info concentrates on. For example, we report on how outsourcing can tackle the No. 1 issue on most executives' lists -- knitting together a physician community that practices thoroughly modern medicine (p. 8).
Outsourcing firms warn of shortages of highly skilled information professionals and emphasize that they can resolve or even head off such personnel pinches. But what of it? How does that affect the strategic direction of a healthcare system? A look at Evanston Northwestern Healthcare's progress toward becoming an integrated delivery system demonstrates the role that access to expertise has played in its success (p. 18).
Carrying outsourcing to a new level, healthcare executives are inventing their own neutral operating companies to orchestrate regional information technology improvements. These initiatives collapse the cost of routing information and position providers to exploit Internet technology (p. 26). ItOs a fascinating example of how executives will climb aboard the vehicle of outside management -- if they can see where it leads.