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Health Care IT Outsourcing: A Conundrum for Providers

  • October 30, 2020
  • Michael D. Rechtin , Seyfarth Shaw LLP , Chicago, IL
  • Chris DeMeo , Seyfarth Shaw LLP , Houston, TX
  • Amy S. Levin , Seyfarth Shaw , Chicago, IL
  • Sheryl T. Dacso , Seyfarth Shaw LLP , Houston, TX

Abstract

As technology has moved from laboratory to industry, its role in commerce has evolved as a critically important and ubiquitous tool for not only individual interactions, but also in the delivery of health care services. Driven by health care regulations, economic survival, and quality standards, and currently by the COVID-19 pandemic, information technology (IT) has evolved as one of the most important components of the health care industry. Common IT functions include application/software development, web development/hosting, application support or management, technical support/help desk, database development/management, telecommunications, and other infrastructure support. Health care providers (Providers) now need to decide on a routine basis whether to provide IT services using internal resources and infrastructure or outsource those services to third party vendors. In making the decision to keep in house or to outsource, many competing interests need to be considered and weighed. Control is lost when ceding IT functions to outside providers, but with that loss of control comes the potential of cost savings and deep expertise in that IT function, which can yield operational benefits and create a competitive advantage. However, if there is a delegation of these IT functions to an outside vendor, the provider still retains the risk and responsibility for health care compliance as the legally accountable organization

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