Low inpatient volume—combined with soaring labor costs and high interest rates—are putting increased pressure on some of the nation’s hospitals and health systems. In response, some healthcare organizations are shipping non-core clinical functions such as IT to third-party service providers abroad particularly in Latin America where labor costs are significantly lower. This approach can cover a broad spectrum of IT services, from building software and managing data to keeping networks running smoothly, ensuring data security, overseeing IT infrastructure, and beyond.
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Contact Us Today!We have seen an uptick in interest particularly among large, multi-state health systems looking to offload IT functions to Latin America. In this framework, US companies can focus on their core competencies while leveraging cost-effective IT solutions to bridge gaps in healthcare delivery.
Consider this: A large health system might spend $10 million a year to run its IT functions (data centers) across the entire organization. Labor arbitrage—searching for and then using the lowest cost workforce—is the next bold play for health care financial leaders. Nearshoring could cut that spending in half, according to the experiences of some of our clients. Nearshoring is a popular strategy whereby companies transfer certain tasks to external service providers in neighboring countries or regions, usually with similar time zones and cultural backgrounds. For US companies, this means nearshoring IT related functions to Mexico, Uruguay, Colombia, Puerto Rico, et al, with the aim of streamlining operations and cutting costs while enjoying proximity to the development centers. In addition, it solves the problem of scheduling joint sessions with the outsourced teams, as both business and IT experts are located in the same or similar time zones.
In this article, we will examine the key aspects that make Latin America attractive as a healthcare IT outsourcing destination.
Why do Healthcare Companies Choose to Outsource IT Functions?
The healthcare IT outsourcing market in the United States is a thriving industry in which healthcare companies hire third-party technology service providers to develop, deploy, manage, and streamline their information technology operations.
A recent Forbes survey of more than 500 hospitals and inpatient organizations found that 90% of US healthcare executives are exploring cost savings through relationships with third-party vendors.
Driven by the integration of advanced technologies like AI, ML, and big data, HealthTech startups in LATAM are helping US companies in improving healthcare delivery, efficiency and accessibility by producing groundbreaking solutions. According to Fortune Business Insights, the digital health market in the Latin America is expected to hit US$35 billion by 2024.
Here are some driving forces behind the growing demand for healthcare IT outsourcing to Latin America:
- Cost Management
- Leveraging External Knowledge/Expertise
- Improving Efficiency
- AI-Driven Transformation
- Demand for Secure and Compliant IT Solutions
1. Cost Management
Healthcare providers, like any other business out there, choose to outsource their IT functions primarily for one reason: to save on resources. Maintaining an in-house IT team, which includes salaries, training, benefits, and the infrastructure required to support them can be costly. Instead, they are choosing leverage the economies of scale and operational efficiencies offered by nearshore IT firms in Latin America to reduce overall IT spending.
2. Leveraging External Knowledge/Expertise
New technologies necessitate unique and in-demand skill sets. Healthcare providers are facing the need to implement and manage complex IT systems, such as electronic health records (EHRs) and cybersecurity protocols. Nearshoring these services to Latin America offers access to a wide array of specialized skills and cutting-edge technologies that may be too costly or challenging to develop in-house. Partnerships with nearshore IT providers in LATAM can significantly speed up the R&D process for new health tech tools.
3. Improving Efficiency
Leveraging nearshore IT services allows medical practitioners to spend more time delivering effective patient care. By delegating IT operations to external experts in LATAM, healthcare providers can concentrate on their core mission—delivering excellent patient care. This focus enables better allocation of internal resources to clinical and operational priorities.
4. AI-Driven Transformation
The integration of artificial intelligence (AI) and machine learning (ML) for advanced data analytics and personalized medicine is driving healthcare providers to seek IT partners who specialize in these fields. There is also growing interest in AI to predict mortality rates and the length of stay for patients. AI-driven tools have shown the ability to reduce the costs of treatment by as much as 50% and it is estimated that the use of AI for diagnostic and clinical decision support in the US could generate value of up to $98 billion.
Outsourcing the development of AI applications to AI-savvy IT professionals amplifies the capabilities of healthcare providers by improving diagnostic accuracy and operational efficiency, leading to better patient outcomes and optimized workflows.
5. Demand for Secure and Compliant IT Solutions
The necessity to manage large healthcare datasets while maintaining data security and patient privacy are paramount concerns in healthcare. These requirements bring with them a complex web of regulatory considerations. Nearshoring these functions to Latin American partners with a firm grasp of these requirements can ease the burden of compliance. Nearshore healthtech companies in LATAM specialize in implementing robust cybersecurity measures and ensuring that data is managed in compliance with privacy laws like HIPAA and HITECH. By utilizing advanced security technologies and protocols, these firms can provide an added layer of protection for sensitive patient data.
Services Provided by Healthcare IT Outsourcing Companies in Latin America
IT outsourcing services extend far beyond mere cost-saving measures; they are essential for integrating advanced technologies, ensuring regulatory compliance, and enhancing patient care. When deciding which tasks to outsource, healthcare firms have to consider their technical ability as well as how outsourcing can benefit them in their digital transformation journey. Here we delve into some of the crucial IT services that healthcare providers can outsource to stay at the forefront of digital health innovation.
- Hospital Information Systems
- IT Infrastructure Management
- Custom Software Development and Support
- Cybersecurity and Data Protection
- Data Analytics
1. Hospital Information Systems
The provision and management of health systems like Electronic Medical Records (EMR), Electronic Health Records (EHR), Business Process Management (BPM), Customer Relationship Management (CRM), and Laboratory Information Management (LIM) systems is a critical component that healthcare providers can entrust to IT outsourcing firms. These systems are integral to the seamless operation of healthcare facilities, storing vast amounts of patient data and medical history. By partnering with specialized IT service providers, healthcare organizations ensure that these complex systems are not only up-to-date with the latest software updates and regulatory requirements but are also optimized for efficient, error-free usage by healthcare professionals.
2. IT Infrastructure Management
Robust IT infrastructure management is indispensable in today’s healthcare environment. Healthcare providers can outsource the management of their IT infrastructure, including servers, networks, and hardware, to ensure seamless operations and data accessibility. By nearshoring IT infrastructure services to Latin American IT firms, healthcare providers can benefit from the expertise of specialists who are adept at ensuring the reliability and security of servers, networks, databases, security, and cloud services. This collaboration can lead to enhanced performance, reduced downtime, and the flexibility to scale resources according to the organization’s needs.
3. Custom Software Development and Support
This approach involves hiring an external partner to design, build, test, and deploy IT solutions such as software applications, websites, mobile apps, or data analytics and visualization platforms. After the delivery of the software solution, a dedicated team of software engineers will consistently maintain your healthcare software, building only specific features as required by your workflow and business strategy. This can help your healthcare organization to accelerate innovation, improve patient access to healthcare services, reduce time-to-market, and promote better patient outcomes and satisfaction.
4. Cybersecurity and Data Protection
With the sensitivity of patient data and the increasing threat of ransomware attacks and cyber security breaches, robust cybersecurity and data protection services are non-negotiable. Healthcare IT outsourcing firms specialize in these areas, providing advanced security measures, ongoing monitoring, and rapid incident response to protect against data breaches. This is crucial for maintaining the trust of patients and complying with stringent data protection regulations.
5. Data Analytics
Healthcare IT outsourcing, in terms of data analytics, refers to contracting external service providers to handle various aspects of data analysis, strategic planning, and administrative functions within the healthcare industry.
In this arrangement, data scientists are engaged with tasks like data collection, analysis, and interpretation that derive meaningful insights from healthcare data. Those insights can then be used to optimize resource allocation and promote strategic decision making.
Consider These Factors When Choosing a Healthcare IT Outsourcing Provider
Before embarking on a partnership with a healthcare IT outsourcing firm, it’s essential to consider several key factors that’ll ensure that your collaboration is fruitful and aligns seamlessly with your operational objectives
Below, we’ve outlined these considerations in a friendly and upbeat tone to help you navigate the decision-making process with ease and confidence.
- Provider’s Expertise in Healthcare
- Cost Structure and Transparency
- Commitment to Security
1. Provider’s Expertise in Healthcare
The healthcare industry is filled with IT service providers who think they can handle healthcare IT outsourcing but are oblivious of how it differs from other industries. When getting into an outsourcing agreement, it’s crucial to look for a partner with a solid portfolio of successful projects that show deep insight into the healthcare industry and compliance with its strict regulations. This is especially true for HIPAA requirements, so make sure they have all the appropriate physical, network, and procedural safeguards in place to protect private patient information.
A capable healthcare IT outsourcing provider should have a solid background of successful cooperation, evidenced by positive, measurable outcomes and outstanding products. They can deliver user-centric design, seamless integration of critical technologies, and accelerate product launch to the market.
2. Cost Structure and Transparency
To determine the monetary impact of outsourcing, conduct a thorough cost study. Assess both the indirect and direct costs of outsourcing, including vendor fees, training and maintenance costs. Evaluate these costs against the benefits and potential savings that outsourcing could bring.
Aim for a partnership that’s financially sound with a clear pricing structure. A transparent cost structure ensures that all parties clearly understand what services will be provided and at what price. Understanding all costs upfront will help you manage your budget and avoid any unexpected expenditures.
3. Commitment to Security
Data security and adherence to healthcare regulations should be top of mind. Partner with a nearshore agency that has a strong track record in protecting patient information and can confidently navigate compliance issues.
Ensure that the products under development as well as a range of existing offerings have built-in security controls that are essential for modern IT environments:
- Secure configuration and hardening
- Authentication and authorization
- Whitelisting
- Data encryption
- Trusted machine certificates
- Auditing and logging
The Challenge Involving Healthcare IT Outsourcing
The most common IT outsourcing challenges in healthcare revolve around compliance, trust, and data security. Let’s review them in more detail.
- Regulatory Compliance and Quality Assurance
- Vendor Reliability
1. Regulatory Compliance and Quality Assurance
Some healthcare IT outsourcing efforts have been met with a slight pushback due to concerns over HIPAA compliance.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides American constituents safety and security regarding their medical records. This means that any institution cannot disclose someone’s health record without explicit consent. This applies even if they aren’t primarily operating in the States.
Here’s how much the HIPAA breaches may cost healthcare organizations:
| HIPAA Penalty Structure | ||||
| Penalty Tier | Culpability | Minimum penalty per violation (inflation adjusted) | Max penalty per violation (inflation adjusted) | Maximum penalty per year (inflation adjusted) |
| Tier 1 | Lack of knowledge | $137 | $68,928 | $2,067,813 |
| Tier 2 | Reasonable cause | $1,379 | $68,928 | $2,067,813 |
| Tier 3 | Willful neglect | $13,785 | $68,928 | $2,067,813 |
| Tier 4 | Willful neglect (not corrected within 30 days) | $68,928 | $2,067,813 | $2,067,813 |
Since the number of breaches in the industry is increasing, companies should partner with HIPAA-compliant software development vendors. Failure to meet these regulatory standards can lead to costly penalties, reputational damage, and legal accountability for both healthcare providers and their nearshore partners.
2. Vendor Reliability
Healthcare organizations rely on the impeccable performance of their IT systems for critical functions like patient care, data management, and compliance with regulatory standards. Failing to maintain safe, secure, and functional IT infrastructure may cause severe damage, so businesses hesitate to delegate these functions to outside vendors.
Key Takeaway
Healthcare is a unique and consequential service, and the decision to outsource should
never be taken lightly. Considering the increasing demand for secure and compliant IT solutions, the trend of adopting telemedicine platforms, AI-powered diagnostic tools, and digital health records, outsourcing healthcare IT services is a vital part of any organization’s evolving service delivery model. Also, in handling large volumes of sensitive patient information of healthcare organizations, outsourcing is a scalable and cost-effective solution to ensuring data security and system reliability.
Do you Need Help with Healthcare IT Outsourcing?
Located in Boston, Massachusetts, Next Idea Tech knows the ins and outs of American healthcare. This includes HIPAA software development requirements and the associated regulations.
We have a multinational team of certified experts ranging from front-end and back-end developers to strategic architects and technology consultants that work often as part of indisciplinary teams at Next Idea Tech in collaboration with your stakeholders to find the most flexible and scalable technology solutions to drive business growth.
We offer a comprehensive suite of healthcare IT solutions designed to address the evolving needs of the healthcare industry including:
- Full-cycle development of healthcare-related systems
- Medical software project assistance, augmentation, and product testing
- Legacy medical software upgrades and reengineering
- Long-term medical software maintenance services
- IT infrastructure modernization with solutions like cloud computing, virtualization, and software-defined storage
- Affordable and transparent pricing
- Personalized connection with our project manager HQ in Boston, MA
- Vast onsite experience with U.S.-based IoT, healthcare, biotech, and pharma companies
- Fast team deployment—typically within 14 days
We are already an efficient outsourcing IT partner for several powerful healthcare companies in the United States. We would be happy to add your organization to our list of our success stories!
Contact us for a free consultation and let’s discuss how our extensive expertise can help you ensure growth in the healthcare market.
