Why Health Systems are Shifting IT to Managed Services

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David Smith, CFO of Anatomy IT

The two largest technology trends occurring in healthcare delivery – digital transformation and cyberattacks – are understandably driving the adoption of more IT platforms, applications, and other tools within health systems and hospitals. Concurrently, features within electronic health record (EHR) systems continue to proliferate and increase in complexity. 

Although these health IT solutions are designed to save time for providers and administrators during their patient care and business duties, they nonetheless require a significant time commitment within themselves, as does protecting systems from threat actors. A steadily expanding IT infrastructure requires more time spent on maintenance, system updates, and technical support at all hours of the day. 

That means hospitals and health systems often need to hire additional IT experts to manage tech support requests, ensure platforms and applications are optimally functioning, and implement safeguards against cyberattacks to protect PHI. IT talent, however, is in short supply, and healthcare organizations often cannot afford to competitively recruit these professionals against companies in other industries.

IT’s growing role across all areas of healthcare is prompting more providers to question the need to shoulder that burden. After all, healthcare delivery organizations’ most important asset is their clinicians, not their IT systems. As providers become ever more reliant on digital technologies amidst a growing threat of cyberattacks, it appears to be time to shift IT responsibilities to specialized partners, so they can focus more resources on their missions and growth.

Healthcare IT Investment is Growing 

IT’s share of delivery organizations’ budgets continues to grow. From 2019 to 2023, health system executives reported digital and IT budgets increased by an average of 18.3%, with one in five citing increases of more than 30%. Further, more than 85% of health systems are increasing their 2024 digital and IT budgets, and almost one-half predict moderate to significant increases.

Yet, at the same time, 44% of healthcare CIOs report “retaining and budgeting for qualified IT resources,” which includes managing internal staff, as their greatest operational challenge related to IT at their hospitals or health systems. Highly trained and experienced staff are crucial for ensuring the operational excellence of the IT infrastructure, but also to protect it and the data within. The Department of Health and Human Services, for example, recently issued an advisory to hospitals and health systems about preventing cyberattacks and data breaches given that reported ransomware attacks against health systems nearly doubled from 25 to 46 between 2022 and 2023. This figure, however, is likely a major underestimate as threat actors’ ransom demands are often paid and incidents not always reported.  

The pressing need to invest in, and protect, technologies without the time or staffing resources to maintain and support mission-critical platforms and applications poses enterprise growth and care-quality improvement obstacles. Many organizations are thus realizing it is no longer feasible to manage health IT entirely in-house given competing patient care demands and clinical staffing challenges, the latter of which is more pressing than IT staffing shortages.

It is no surprise then that 59% of hospitals with over 150 beds reported that they are strategically choosing to increase their non-clinical outsourcing in 2024, according to polling results from Black Book Research. IT-managed services represented the largest segment of outsourced non-clinical services that Black Book measured, totaling $60 billion in 2023.

Why Shift IT Services to Partners

Solving digital transformation and cybersecurity challenges and easing the burden on staff are important, but not the only reasons healthcare providers are seeking and retaining IT-managed services partners. Outsourcing offers additional benefits that organizations are in dire need of given their current financial constraints. A few of those benefits include:

  • Cost savings. Managed services firms offer organizations the opportunity to convert fixed IT costs into variable costs, paying only for the services they use. This eliminates the need for large upfront investments in the IT infrastructure and allows organizations to ramp up staff for major implementations and then scale down when clinicians and staff have transitioned to a new platform.
  • Access to specialized expertise. Outsourcing to a firm that specializes in servicing healthcare delivery organizations ensures access to a team of experts who understand the unique challenges and compliance requirements of the healthcare sector. Not only are these professionals experts in healthcare delivery workflows and operations, but they can also share best practices learned from other clients that can be applied within your organization. 
  • Focus on core competencies. Providers should not be burdened with technology and related workflows that add non-productive, non-reimbursed hours to their schedules, impeding them from delivering the highest quality care. A qualified specialized IT-managed services partner can help remove IT disruptions from their workflows without major platform or application overhauls.
  • Scalability and flexibility. Enterprise-wide growth may be inhibited due to limited internal IT resources. An IT-managed services partner can help organizations scale faster by plugging in staff to accommodate a new facility launch, post-M&A integration, or standup new departments or operations and then wind down as needed.

Determining ROI is the First Step

The benefits of adding an IT-managed services partner are clear in this rapidly changing time in healthcare, but vary depending on the size, background, and goals of the organization. That is why the potential return on investment should be calculated before moving forward with such an operational shift. From a high-level perspective, this ROI investigation needs to include three key components: 

  1. Begin by calculating the total costs of operating an in-house IT support function, including salaries, benefits, equipment, software, and other costs, including those related to IT, but may not be reported in the IT department.
  1. Next, determine the cost of managed IT services, including the hard-dollar partner fees, but then subtract tangible and intangible benefits such as improved response time and eliminating clinician downtime, and time spent on cybersecurity training, compliance, and mitigation.
  1. Assign a low, medium, and high value to each benefit, which will likely vary depending on the organization, its challenges and growth strategy. For example, organizations in communities with few available IT job candidates may rank access to those experts higher than in higher population areas with more applicants. 

Comparing the two numbers often reveals that the costs of managing IT internally will be substantially more than partnering with a specialized managed services provider. The ROI investigation may also help organizations identify which areas of IT support they need sooner rather than later. 

Freedom to Focus on What Matters

Health IT systems continue to play an even greater role in healthcare delivery, and cybersecurity threats continue to grow, both of which are consuming more budget, time and resources within organizations that face enormous financial constraints and uncertainty.

Keeping all IT services inside an organization may offer a stronger sense of control, but that benefit is becoming increasingly outweighed by the need to dedicate more resources to improving care quality and patient satisfaction. 

Instead, by bundling managed IT and cybersecurity services with a single firm, organizations can have the control and accountability they require along with access to much-needed resources and expertise. An experienced, specialized partner can offer a comprehensive and streamlined approach to safeguarding the integrity and efficiency of IT systems and operations while enabling growth-oriented organizations opportunities for accelerated expansion across new communities and services to care for more patients. 

About David Smith

David Smith is CFO of Anatomy IT, which helps healthcare providers deliver exceptional patient care through technology and cybersecurity solutions.