Healthcare IT Outsource
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Healthcare CIO: Is Outsourcing in Your Future?

In 2011, when I was asked to take over as CIO of a 16-hospital system, the IT organization was just coming off a 10-year outsourcing contract. The outsource was a debacle.

A primary reason was that the contract called for the vendor to lose money in the first four years, in order to show financial gains for the health system. The vendor was then forced to make that loss up in the final years of the contract with strict contract adherence, inflexibility, and shortcuts.

So, why are we even having this conversation? Because I’ve seen four signs that lead me to believe we could be heading there again. It’s early, but we’ve seen it before.

Before we take a look at the signs, I want to introduce you to the outsourcer’s sales playbook.  I believe there is more value in considering those things we can control before getting alarmed about things we may not be able to control.  Here goes.  The outsource players playbook at a high level.

The Outsource Playbook

It hasn’t changed in a few decades, so let’s take a look.

  1. Establish executive relationship
  2. Lead with vision
  3. Reinforce credibility
  4. Ask boldly

The outsource players will start at the top, with the CEO or even the board. Rare is the outsource that starts at the CIO.

Every IBM commercial is a vision-casting session targeted to your executives. Machine/Human partnership with AI that improves outcomes. Digital Transformation that addresses the consumer experience and increases HCAHPS. Data strategies that provide real-time visibility into the operation and delivers a smarter hospital.  You can literally see the future on the screen of this weekend’s sporting events.

Credibility is established through referral.  Executives talking to executives.  It’s powerful.

Here is the irony, though. When they outsource, they will ask for millions — and even over a billion — in funding, and they may get it. They will get it because the vision is compelling.  It is communicated extremely well, they will have references which reinforce their credibility, and, in the end, they will have funds that enable them to rebuild the IT environment the way it should be, based on today’s technology.

What’s the point?

It is a good playbook, and you may want to use it yourself.

Be the source of vision for your health system. Consider creating a video to communicate a digital vision. Establish strong executive relationships. Deliver and showcase the results of your IT initiatives.

Don’t be timid. If you believe in your vision and your organization’s ability to deliver on it, ask for the funding and provide the leadership necessary to make it a reality. It really is a good playbook.

You may also want to consider an uncomfortable reality: your system may be better off with an outsourcing arrangement, or at least a selective outsource arrangement. Consider what things you just may not be good at and discuss if a vendor may be able to help you get ahead of the curve, instead of behind it.

Now that you know the playbook, I’m going to present the signs I’m seeing in the marketplace.  Love to know if you are seeing the same things.

Healthcare IT is Falling Behind

A vendor shared with me a story of a health system that is currently experiencing performance problems of their virtual desktop environment which is being blamed on the network. I asked him what he thought the problem could be. His answer? “For starters, they haven’t applied patches and fixes to the system in over a year.”

The Equifax breech is said to have been caused by a server that wasn’t patched from earlier this year. The servers that the vendor was speaking about haven’t been patched since September of last year.

You can see how a problem is not just possible, but almost inevitable.

Healthcare is having a bad year financially

12 articles on the section front page, 11 reflect poor results.  A common precursor to outsourcing.

Finance Begins to Make Significant IT Decisions

I was interviewed earlier this year by a major health system that was going through financial challenges. The interview was conducted by their interim COO, a no-nonsense financial guy who really knew the numbers and apparently (at some point in his career) understood IT.

IT is changing so rapidly, though, that old models implemented in the new environment can be costly.

Case in point: to address performance problems, the COO had broken IT down into seven silos (network, compute, storage, virtual desktop, etc.). He then signed contracts with six different vendors to provide comprehensive support for the environment.

His theory was that no one knew the network better than Cisco, storage better than EMC, VDI than Citrix… you get the picture. He set the foundation for a massive game of finger-pointing.

This reminded me of a situation early in my career. We were having problems with workstations in Chicago running slow. We got everyone on the phone to determine who to call. Is it a network problem, VDI problem, Virtualization problem, or something else?

Eventually, some smart person said it has to be a network problem. Who are we to question it? We call Cisco. Cisco tells us it’s a VDI problem. Who are we to question it? Citrix says the servers haven’t been patched, and it’s a hardware problem.  Who are we to question it?

Three weeks later, we still had a problem with the workstations in Chicago.

The CIO’s role is one of the most complex in the organization. The tools of the trade are changing daily, the external and internal client demands are growing in number and sophistication, and the impact of data on the business is widely considered to be one of the greatest measurements of your future success.  Finance is an important voice, but it should never be the primary voice.

The Outsourcing Calls Have Started

My name still shows up as the CIO of a $6B health system, on the old lists that get bought by companies looking to do marketing. In fact, I got a call a month ago about a player that had answers to getting better performance from my IT assets.

Citing Cleveland Clinic’s five-year deal with IBM, they proceeded to tell me what they were doing for other healthcare companies.

It was a compelling story, I’ll give them that. In fact, I told them I was more than willing to outsource the support of the five family computers I had here at the house.

“Hello? Hello, are you still there?”

Now, these are just some signs. It doesn’t mean that we are on this path, just that the signs are starting to emerge.  You may agree or disagree with me, I’ve been wrong before.  Either way, I believe we can all benefit from establishing strong executive relationships, leading with vision, reinforcing IT’s credibility, and asking for resources boldly when you believe in the plan and your team.

Hope this helps.  If you want to discuss further you can always reach out at [email protected].  You can also follow me on @ThePatientsCIO.