Health systems lean into outsourcing

Health systems are increasingly turning to outsourcing as a strategy to address operational inefficiencies and financial pressures. Recent moves by several systems reflect a growing trend of delegating revenue cycle and IT responsibilities to external partners to improve agility, cut costs and redirect focus to patient care.

Roseville, Calif.-based Adventist Health is the latest system to implement a wide-ranging restructuring that affects about 750 employees — including 300 corporate roles — as part of a broader initiative involving the outsourcing of several business functions. The 27-hospital system is outsourcing finance, human resources, talent acquisition, supply chain IT and accounts payable operations while retaining oversight responsibilities. 

The decision is part of a slate of financial sustainability efforts spurred by Medicaid cuts, federal policy changes and escalating labor and supply costs. Adventist said the restructuring aims to shift resources toward direct patient care. The system is also requiring corporate employees to return to the office in 2026.

Some employees affected by the changes will transition into new roles with Adventist or its vendor partners, while others will receive support through career transition workshops and emotional and spiritual counseling.

“While changes like these bring a significant impact to our workforce, they are a necessary response to the challenges facing our organization and industry,” Adventist President and CEO Kerry Heinrich said in an Aug. 20 news release. “We have a responsibility to our patients to ensure our long-term financial sustainability and to invest in high quality care delivered with deep expertise, a modern infrastructure, and a more connected workforce.”

Minneapolis-based Allina Health has also leaned into outsourcing through a recent partnership with Optum, part of UnitedHealth Group. In May 2024, about 2,000 Allina information systems and revenue cycle management employees transitioned to Optum while continuing to support Allina’s patients and providers. The health system has taken advantage of Optum’s technology, capabilities and resources to expand its current IT and revenue cycle operations, streamline billing processes and accelerate the adoption of innovative technologies.

The move aligns with Allina’s broader financial and operational strategy following a significant turnaround last year. The health system reported an operating loss of $16.6 million (-0.3% margin) for the year ended Dec. 31, 2024 — a $344 million improvement from the $360.5 million loss (-7% margin) in 2023, according to recently published financial documents.

In another recent example of IT outsourcing, Providence, R.I.-based Care New England transferred nearly 160 IT staff members to IBM spinoff Kyndryl. CIO Tomas Gregorio told Becker’s that the move made the system more agile and improved efficiency, service quality and governance.

“Despite a rough transition, Kyndryl adapted well, and we revised our governance framework to stay aligned with our strategy,” Mr. Gregorio said.

To ensure accountability, Care New England established an executive group tasked with monitoring the vendor’s performance and deliverables. The partnership has also helped the system streamline change management and readiness planning, particularly during Epic implementation and digital transformation efforts.

“This shift has enabled faster decision-making and more effective execution of strategic initiatives,” Mr. Gregorio said.

Several health systems have also recently struck revenue cycle partnerships. Memphis, Tenn.-based Methodist Le Bonheur Healthcare tapped Ensemble Health Partners to manage end-to-end revenue cycle operations across its six hospitals.

Sandusky, Ohio-based Firelands Health and Jonesboro, La.-based Jackson Parish Hospital also forged new agreements with Ensemble and TruBridge, respectively, to support revenue cycle functions. 

As financial pressures mount and digital demands grow, health systems are increasingly turning to outsourcing as a strategic lever to not just cut costs but also position themselves for long-term agility and sustainability.

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