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Global health IT outsourcing market to hit $50 billion by 2018

Don Fluckinger, News Director

Our article series on health IT outsourcing anecdotally revealed where many healthcare providers are spending budget on third-party services. Two new reports quantify the

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trend with stats and show the specific reasons providers are signing on with outsourcing firms for clinical and operational services.

Providers are looking for long-term impacts and are optimistic that outsourcing their revenue cycle services is going to deliver just that.

Erik Westerlind,
research director, KLAS

The global health IT outsourcing market will grow from $35 billion in 2013 to $50.4 billion in 2018, according to analysts at MarketsandMarkets.com. The United States and Canada will continue to account for the largest slice of the $50.4 billion pie, they contended, thanks to several drivers. Those include growing pressure to cut healthcare costs, the rise in demand for application management services, application development, the need for additional infrastructure, a growing population of insured patients, a lack of in-house IT experts and ICD-10 implementation.

The researchers found that outsourced staff can be more nimble than in-house staff who are already spread thin. Instead of expanding IT departments, healthcare providers are choosing to outsource because it can help reduce operating costs, offers access to skilled resources, speeds up technology deployments and brings flexibility in the choice of technology and modules. Choosing the right outsourcing partners can improve cash flow and enable risk sharing.

There are specific health IT pieces providers are outsourcing, including EHRs, laboratory information management systems, pharmacy information systems and revenue cycle management (RCM) systems on the clinical side. On the operations side, providers look to outsourcing firms for supply chain management and business process management. Straddling both are ICD-10 conversion services, which the report sees as a growth sector between now and 2018.

In a separate report titled "Revenue Cycle Outsourcing 2013: Tools, Expertise and Resources Key to Improved Collections," KLAS found that 38 healthcare organizations spanning a total of 460 hospitals use RCM outsourcing firms. Large integrated delivery networks such as Catholic Health Initiatives, LifePoint Hospitals and Catholic Health Partners are leading the way in this category, citing improved collections, greater efficiency and better accuracy as reasons for going out-of-house for RCM.

"Providers are continuously being asked to do more with less," said Erik Westerlind, report author and research director at KLAS, in a press release. "Revenue cycle outsourcing is an area where that is possible. Providers are looking for long-term impacts and are optimistic that outsourcing their revenue cycle services is going to deliver just that."

Let us know what you think about the story; email Don Fluckinger, news director, or contact @DonFluckinger on Twitter.


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