IT outsourcing is literally a very “big deal” for hospitals: it represents a significant multi-year financial investment, potentially great benefits — and certain risks. Managing an IT outsourcing contract diligently and sensitively from day one is essential both to the success of your partnership and your hospital.
Let’s say your hospital like many is considering the potential value of outsourcing its IT department or several IT functions. Or, you’ve already signed a contract with an outsourcing partner and may be replacing an unsatisfactory vendor. But don’t think a full takeover should occur as soon as the ink is drying. The partnership’s success requires a well-planned and orchestrated transition phase. Outsourcing partnerships affect many hospital systems, processes and people — even data security. A well-executed transition-in will protect against disruption and loss of existing efficiencies and will enable the opposite: smooth change, enthusiastic buy-in and early wins that pave the way for long-term successes. Learn about four critical steps that will set the stage.
Three-quarters of health systems with more than 300 beds and 81 percent with fewer beds are relying on outsourcing for various IT management and infrastructure services, according to Black Book Research. As discussed in previous posts, some 40 percent of hospitals are not happy with their experiences. Still, most say that they will continue or even increase IT outsourcing to achieve greater efficiencies and reduce costs. Black Book reports that average hospital costs must be reduced by 24% by 2022 just to break even, and outsourcing is increasingly seen as a solution, with IT topping the list. Most hospitals that are dissatisfied with current vendors are moving to a different, hopefully more effective outsourcing solutions.
No phase of any outsourcing engagement is more important than the transition-in, especially in partnerships that include an onsite presence of the vendor’s staff or an impact on the hospital’s staff — which is likely in most outsourcing arrangements. The complexity of these transitions and their effect on the hospital should not be underestimated. To achieve benefits they need, hospitals must ensure that their outsourcing partners get off on the right foot; early missteps can delay or even jeopardize those benefits.
Here are four key elements of successful HIT outsourcing transitions, most of which rely on your outsourcer’s experience and expertise. Strong governance by the hospital’s leadership is also a big factor in the transition as well as the strength and effectiveness of the overall partnership.
- Knowledge Acquisition
Despite pre-contract discussions which will have covered high-level internal issues, your outsourcing vendor must dig into the weeds post-contract to assess and analyze details of your hospital’s IT-impacted current-state operations. The scope of the analysis likely will include many clinical, financial and other functions. It will require numerous executive and user interviews and poring over documentation. It must capture your IT functions’ existing capabilities and strengths, related processes, gaps, weaknesses and preliminary opportunities for improvement. The vendor also must understand the hospital’s policies and strategic objectives as they relate to IT systems and staff. All of this data should be collected by your vendor and managed through an established methodology that includes documented knowledge-gathering and analysis processes and templates.
- Knowledge Transfer and Training
All that information-gathering is worth little if it doesn’t inform the outsourcing firm’s staff and affected existing on-site hospital staff. The outsourcing team needs intimate knowledge to understand the environment and develop needed plans and objectives. Equally important, this knowledge must be communicated sensitively and effectively with appropriate existing in-house staff. As any qualified healthcare IT outsourcer knows, every hospital is unique across many factors. Sometimes, extraordinarily so. No IT outsourcer should come into your hospital with a cookie cutter approach; it will not succeed. Where knowledge of healthcare laws and compliance, security and privacy concerns, industry issues, best practices, technologies and need-to-know hospital intelligence is lacking within the hospital’s staff members, the outsourcer’s team must train them. As time-consuming as this may be, it will be worth every minute. Fortunately, training can take place over time, but the most immediate needs should be addressed during the transition. Bringing staff up to date will enable the vendor’s staff and hospital staff to be in sync going forward. Attention to this step will serve another purpose: gaining the trust of the internal staff — which takes us to the next priority.
- Building a Collaborative, Trusting Relationship with Internal Staff
While the outsourcing firm may have sold your hospital’s executive team, existing IT teams will not necessarily welcome outsiders enthusiastically. Nevertheless, many IT-affected hospital employees may already be frustrated by internal problems, and they don’t want to leave their jobs. Some may be distrustful and feel threatened. Some may intentionally hide information to protect themselves or to set up your outsourcer for failure. The outsourcing firm should have had experience with people-factors like these and have experience and a tried-and-true methodology for managing them. The firm should anticipate these reactions and sensitively prove itself to hospital employees. It must establish its credibility and gradually, its authority. Most importantly, it must genuinely demonstrate that it cares about the staff’s concerns and ideas, and establish strong transparency including an open-door M.O. Your outsourcer can transform hospital employees into fans if it knows how to do so!
- Preserving the Functionality of Existing Systems and Processes
Many hospitals worry that an IT outsourcer may become the proverbial bull in a china shop. Will the outsourcer make changes without understanding the internal consequences? Will it have prejudices against current solutions that work well? Will it cut corners that negatively impact the hospital to increase its own revenue? Will it act upon inadequate information because of poor due diligence? At least five protections against such dangerous scenarios exist:
- Before making any significant changes in your operations, the vendor should collaborate with appropriate internal staff to produce a well-documented short-term action plan. Your hospital should have approved it. The plan will help ensure on-time delivery within the budget, and prevent project failures due to unclear scope of work.
- The vendor’s operations must be transparent. Hospital leaders and stakeholders should know which employees are working to fulfill the plan and have access to them.
- Service level agreements (SLAs) must be in place and monitored as frequently as the vendor agreement requires. (Yes, make sure you have agreed on SLAs pre-start-up!)
- Change control procedures should be activated, clearly documented, adhered to and reported on. If necessary they should be incorporated into existing agreements as agreed-upon modifications. Both hospital and vendor staff should be trained in revised procedures, updated systems and processes, and potential ramifications of such changes.
The duration of IT outsourcing transitions can vary greatly, depending on factors such as availability of existing documentation, the complexity of the systems environment, unexpected discoveries, and lack of cooperation within the hospital’s staff. The latter holds the greatest risk to the success of the partnership. Both your hospital’s leadership and your outsourcing vendor should recognize that sensitive change management and relationship-building are of highest priority. Your hospital must prepare the organization for the move to outsourcing and pay special attention to internal IT staff, including addressing potential concerns about employment longevity or changes in responsibilities. As the transition unfolds, your outsourcing vendor must carefully pick up the reins and methodically prove itself to be a trusted partner and key to the hospital’s future success.
To discuss Phoenix’ IT outsourcing capabilities, contact us!