Outsourcing in the pharmaceutical industry is a growing trend, but what are the benefits, or implications, that this will cause?
In its 2015 annual survey of biopharmaceutical manufacturers, BioPlans Associates found that outsourced manufacturing is a trending budget strategy, with nearly half of the companies planning to increase their budgets for outsourced manufacturing. Many of these companies use outsourcing as a cost-cutting measure or a way to develop valuable partnerships in areas that are not viable as in-house services. Among the most outsourced manufacturing components are:
- Analytical bioassay testing
- Fill/finish operations
- Bioprocess validation services
- Lot release testing
Each of these areas represents a segment of manufacturing that can be data intense and can also significantly affect the bottom line if it is not done efficiently, accurately and in a timely manner, or is not managed with top-line expertise. For example, outsourced bioassay testing to measure drug potency, fill/finish operations that manage biopharma agents when they are at greatest risk of instability and lot-release testing protect companies at points in the manufacturing process when they have the most to lose if they aren’t done correctly. In addition, many of these processes require highly sophisticated technology and equipment that may not be cost effective to deploy in house.
Outsourcing for hospitals and health systems
Whereas biopharma has turned to outsourcing for many components of its manufacturing process, hospitals and health systems have been slower to utilize outsourcing. They have often attempted to fund and staff most, if not all, of the supportive services required to provide healthcare. That trend is rapidly changing, however, as they search for ways to save money, improve productivity and deliver quality care. Healthcare organizations now more clearly see IT as a logical service to outsource to help achieve their goals.
Based on 2015 survey data, RnR Market Research projects that global healthcare IT outsourcing will increase by 7.6 percent per year. By 2018, the company estimates total healthcare IT outsourcing will reach $50.4 billion, up from $35 billion in 2013. Payers, providers and pharma are all driving that increase.
- Reduce operational costs (equipment and personnel)
- Focus on their core business, including redirecting staffing and training budgets to core services
- Improve access to IT expertise and new technologies
Adventist HealthCare in Gaithersburg, Md., is one example of a health system that has embraced this strategy by currently outsourcing about half of its IT functions, including:
- Desktop and telecommunications support
- Asset management
- Engineering and consulting
- Equipment purchasing
Maintaining in-house IT expertise can be a costly endeavor if healthcare organizations have to compete with other industries that have IT hiring requirements. Outsourcing helps level the playing field as IT companies vie for lucrative healthcare contracts. It can also be the best way to address the abundance of federal, state and local regulations, and the unremitting updates in coding and standards of care, all of which require an enormous amount of time and dedicated resources.
Demand for integrated IT solutions is increasing. At the same time, the Centers for Medicare and Medicaid (CMS) is intensifying its focus on meaningful use criteria to push adoption of electronic health records as a way of gathering data to coordinate care, enhance the exchange of patient information and, ultimately, to improve healthcare outcomes. Outsourcing IT services in the current environment may be the only practical option for hospitals and health systems that want to maintain their fiscal viability while continuing to serve their communities by providing quality care.
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