Out-Source or In-House?

Staff Writers

An important consideration when looking at the development of new health information technological functionality is whether to obtain the system from an outside vendor or build the system using primarily internal staff.

Criterion

Basically, according to healthcare Chief Information Officer [CIO] Richard Mata MD MIS, such a build or buy decision depends on the following aspects:

· Availability of internal resources to hire the highly skilled staff needed to create a new system;

· Availability of vendors with proven expertise in the area of technology relevant to the new project; and

· Flexibility of the vendors to customize their products, for hospitals or health entities, with unique needs.

Consultants versus FTEs

The temptation to use consultants rather than FTEs to develop and implement the new system needs exploring.

Advantages

On the positive side, finding consultants that have highly specialized expertise relevant to the project is often less difficult than finding such expertise in people willing to come on board as FTEs. Such expertise in clinical informatics may be critical to the success of the project.

Disadvantages

On the negative side, the cash outlay for multiple consultants can be staggering, especially if multiple consultants come on board with long-term contracts and retainers. Specialized consultants may charge up to $150 to $200 dollars per hour, quickly draining the most robust of IT budgets. Consultants should be used for just that — consulting. They exist on the project for their expertise and transfer of knowledge to the rest of the staff. To use consultants to do the hands-on tasks of actually building the system is generally not an optimal use of the consultant’s time. Consultants, if used at all, should typically be used on a temporary basis to share their expertise and advice during critical parts of the project.

Off the Shelf Applications

Overall, buying an application off the shelf may be favored for more sophisticated healthcare applications. For example, computerized order entry and eMR systems have a number of dedicated vendors that are vying to achieve market share. For major projects, distributing request for information (RFI) packages to selected vendors enables physician-executives and senior management to critically evaluate the different vendors in parallel, in the end selecting finalists and the vendor of choice. A critical requirement when evaluating vendors is that they have a strong client reference base. The best predictor of future success is past success, and thus multiple existing satisfied clients are essential in the chosen vendor.

Hospitals and Healthcare Systems

Larger academic or tertiary care systems, however, tend to have more access to expertise and more significant customization requirements. Consequently, building a home-grown system rather than outsourcing the work to a vendor may be the best strategy for such institutions.

Vendors

When working with vendors, one should be strategic in price negotiations. One suggestion is to link part of the vendor compensation to the success of the implementation. This puts the vendor partially “at risk” for project success and thus provides additional incentive for vendor cooperation. Additionally, one should not purchase a system or services from the initial bid. It is critical that more than one vendor bids for the project to provide a pricing and negotiation advantage.

There is nothing that states only one vendor can be chosen for a project.

Best-of-Breed

Although obtaining everything from one vendor can lead to a more seamless integration and prevent the juggling of multiple vendor relationships, using more than one vendor may in some cases lead to a higher quality end product. This is known as the “best of breed” approach and is a viable option, in particular for complex projects where a single vendor does not adequately meet user needs.

For more basic administrative systems, there are also off-the-shelf products from vendors that may be applicable. Where there is less need for customization, a single vendor may work out very well. Where there are significant unique needs that require customization, once again it may be best to develop the system internally or outsource the work to multiple vendors.

Assessment

There is also the issue of small or rural hospitals that have limited resources. For such institutions, investments in more complex information systems may be difficult. Consequently, many vendors offer “stripped down” versions of their systems at a more affordable price, specifically tailored to the small hospital. The ability to customize the system for unique needs, however, is significantly more limited.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. When launching a health information technology systems, how do you decide the question; in-source or outsource?

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Filed under: Information Technology | Tagged: EHRs, EMRs, Health I.T., Information Technology | 1 Comment »