Healthcare Providers Reap Benefits of IT Outsourcing

The fact that the healthcare system is ripe for restructured processes and new technology isn't new - the concept of full information technology (IT) outsourcing to transform the business or process is. Riding this wave of transformative outsourcing are two of CSC's healthcare provider clients, Childrens Hospital Los Angeles (CHLA) and New York City-based Saint Vincent Catholic Medical Centers (SVCMC).

Both providers have outsourced the IT functions of their organizations to CSC. The arrangement is enabling the automation and redesign of complicated processes that run these hospitals - a change that is helping both hospitals meet government-mandated regulations set forth for the healthcare system. These changes are also lowering operating costs and increasing the overall efficiency of the organizations, making hospital operations more similar to most modern businesses.

The demand for change in the healthcare system

Healthcare providers are faced with obstacles that make the need for major change evident. Not only are hospitals experiencing a nursing shortage in the wake of an aging Baby Boomer generation, they are also enduring rising costs, decreasing government reimbursements, complications in recruiting critical IT talent, disjointed processes and lagging use of information technology.

Many healthcare institutions still adhere to paper-based processes, a catalyst for human error, increased costs and inefficiency. According to the Institute of Medicine, medical errors account for somewhere between 44,000 to 98,000 deaths each year, more than those claimed by breast cancer or car accidents. These errors are the eighth leading cause of death in the U.S. But the Journal of the American Medical Association states that 28 percent of medical errors are preventable.

The U.S. government is now calling for new technology solutions that will reduce cost, administrative tasks and ultimately the incidence of medical errors. Hospitals are under increased pressure to meet the standards set forth in The Health Insurance Portability and Accountability Act (HIPAA) by October 16, 2003. HIPAA's requirements, established by the Department of Health and Human Services in 1996, are intended to standardize and facilitate electronic transmission of administrative and financial transactions.

An efficient method for change

Even with the incentive to embrace technology, the key challenge for hospital administrators is to determine how to do so. Full IT outsourcing is a pragmatic solution for hospitals, many of which must upgrade infrastructure and applications concurrent to redesigning processes. The concept is still new in healthcare, but one that can be highly successful with a knowledgeable technology partner like CSC.

Luis Taveras is CSC's account executive for SVCMC. He reports frequently to the CEO and is regarded as a member of the senior executive team there. Taveras believes that the relationship is vital to the success of the outsourcing project. "The CEO's commitment to the project and interest in close collaboration is really the key to making an outsourcing arrangement of this magnitude work," he says. "CSC's recommendations at St. Vincent's are taken seriously and we are moving through the project stages smoothly," he says.

CSC was tapped by SVCMC, one of the New York metropolitan area's most comprehensive health care systems, to create the infrastructure needed to merge the IT systems of seven hospitals and one behavioral health center. Once completed, SVMC will be left with a single system for the entire organization that will manage the clinical processes that facilitate patient care, and the administrative processes that manage the organization.

To get there CSC started from scratch, developing the business case process to set the IT strategy. The project is centered around application unification among the eight entities, but all components - network, processes, applications and desktop - must be standardized to accomplish the goal. This is no easy task, considering that hospitals operate under a dizzying number of processes. Clinical processes include events such as registration, admissions, discharge and transfer, medication management, lab and radiation. Further processes are considered subsets - for example, insurance processing is part of the admissions process.

Unification and automation across the entire organization is important because discrepancies can cost hospitals money and time away from patients. "Hospitals want to focus on improving patient care, but they can become bogged down when insurance claims are rejected or when claims have been submitted with incorrect patient information," says Taveras. "Improving the accuracy of information and speed of transmittal is something that can be alleviated with the right kind of technology."

While most hospitals have IT departments, many aren't able to maintain the highly skilled staff. Anne Roeser, CSC's account executive at CHLA, says, "Hospitals specialize in patient care, not in technical IT services staff."

Roeser, like Taveras, has the support and confidence of the hospital's executive team. Under Roeser's direction, CSC's team is managing CHLA's IT operational functions and is also involved in several system implementations. Currently, the focus is on implementing new Clinical and Financial Information Management Systems, which will provide the capability of both retrieving and disseminating patient-specific data across the entire health care system.

"Outsourcing the IT function to CSC has relieved CHLA of the day-to-day operational management, enabling greater focus at a strategic level for future planning," says Tricia Cascione, executive director of information technology development and contract management at CHLA.

With the improvements that CSC has made in IT operational functions and availability of applications, "We are able to get out of the daily crisis mode and focus our efforts on continuous quality improvements, including new system implementations," says Cascione.

Evolving toward full outsourcing

It is common for hospitals to outsource processes like medical records, transcription and registration to separate vendors, however using one vendor to handle all of these processes is a pattern that is expected to grow. According to the Gartner's Spending and Staffing Survey, more than 58 percent of integrated delivery systems have outsourced at least one Information Technology function. This is up from 52 percent in 2000, and 47 percent in 1999. (Gartner Research Note, "Outsourcing Experiences Vary for Healthcare Providers", J Gabler, 07 June 2002).

Taveras believes that full IT outsourcing will become more common with time. He relates that hospitals, for years, have outsourced laundry, cafeteria food and biomedical services to be freed from the operation of those functions. "Hospital administrators will begin to see technology as an enabler of their business, instead of a cost center, as cost savings and ability to improve quality of care increases," he says. "Transforming the business processes in the dramatic way that full outsourcing allows will lead to hospitals with the infrastructure to be managed like businesses."

Related Information:

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CSC's experience in the healthcare industry spans decades. Read about CSC's offerings and case studies from client projects.

Business Process Outsourcing (BPO) is helping the healthcare system reduce cost and improve service quality - returning the focus to core business capabilities. Find out more about CSC's BPO offerings for healthcare.

Read more about IT Infrastructure Outsourcing.