Since IT outsourcing (ITO) became prevalent, there have been 54 healthcare organizations that have either discontinued outsourcing or changed outsourcers. Of these 54 organizations, 76 percent have discontinued outsourcing by either bringing everything in‐house or reducing to less than 50 percent ITO, while the other 24 percent have changed outsourcers.
Major reasons for discontinuing outsourcing or changing to a different outsourcer include the outsourcer not delivering as expected, higher than‐expected costs, a lack of control, objectives not being aligned, and a poor cultural fit. There are also some providers that brought IT back in‐house because they merged or were acquired by a health system that had in‐house IT capabilities.
When providers were asked about expectations not met, the most frequently mentioned issues had to do with the outsourced staff either lacking expertise, lacking project management skills, or more general issues with staff. Not being proactive or responsive to issues was also mentioned. Interestingly, 50 percent of respondents indicated that the expectations not being met by the outsourcer were clearly defined in the contract. Despite these results, there were two positive trends that arose from this question: (1) 31 percent indicated that their expectations had been met in 2008, up 11 percent from the 2006 study, and (2) missed timelines are down considerably.
In this study, KLAS attempts to give the reader a more complete view of what is happening in the extensive ITO space by measuring outsourcer performance and providing insight into the experiences of the outsourced organizations. Unless otherwise noted in the study, ITO refers to engagements where a majority or all of the IT department is outsourced.
Vendors included in this study are ACS, CareTech, CSC (FCG), Eclipsys, McKesson, Perot Systems, PHNS, Phoenix Health Systems, and Siemens.
For more information on this or other research, visit the KLAS website or contact a KLAS representative at 800-920-4109.
KLAS is a research firm specializing in monitoring and reporting the performance of healthcare vendors. KLAS’ mission is to improve delivery, by independently measuring vendor performance for the benefit of our healthcare provider partners, consultants, investors, and vendors. Working together with executives from over 4500 hospitals and over 2500 clinics, KLAS delivers timely reports, trends, and statistics, which provide a solid overview of vendor performance in the industry. KLAS measures performance of software, professional services, and medical equipment vendors. For more information, visit the website, email marketing at KLASresearch.com, or call 1-800-920-4109 to speak with a KLAS representative.
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