There is a high rate of growth in the international market of IT services in the healthcare sector, along with an increasing demand for specialized software used by electronic health records, patient portal, and healthcare billing platforms. However, creating healthcare software development yourself will turn out to be costly and time-consuming.
With many healthcare organizations and healthcare tech companies opting to outsource their healthcare software development, this may just be what you need to speed up the process. Yet outsourcing your software development will not be an easy task as there is much at stake when it comes to patients’ sensitive information, regulatory issues, and quality control.
Here is our complete guide on how to make the most of your experience with outsourcing healthcare software development.
What Does It Mean to Outsource Healthcare Software Development?
Outsourcing healthcare software development is about forming a partnership with an outside group that can develop software for the healthcare sector. This can be done through a freelance programmer, a small software development company, or even a huge offshore software development company.
The type of software to develop can vary a lot. It might include telemedicine software, EHR systems, billing software, clinical decision support systems, or any other kind of healthcare software.
Basically, outsourcing software development allows you to extend your team by adding specialists who know how to deal with technologies and regulations in this particular field.
Did You Know?
The total market size of healthcare IT outsourcing has crossed US$ 46 billion by 2023, and it is estimated to exhibit a CAGR of over 7% till 2030. The healthcare industry stands amongst one of the fastest-growing vertical industries in outsourcing IT services globally.
Why Companies Outsource Healthcare Software Development
In most cases, the choice to outsource software development for the healthcare industry is not motivated by a single reason alone. It’s often a combination of several factors such as cost, timing, availability of talent, and others. Let’s take a look at some of the reasons healthcare companies are opting to outsource:
Access to Specialized Workforce
There are certain competencies that must be taken into account in order to work in the sphere of healthcare software development – knowledge of HL7 FHIR standards, DICOM protocol, and HIPAA compliance rules among other things. It’s hard to find a person who has all of them. Software development companies in the field of health IT already have employees with the necessary skills.
Increased Speed of Development
Building your own team of software developers will consume lots of time because there will be the need to hire, onboard, train, and manage people. With an outsourcing company, you’ll use an established process and increase the speed of the development of your software. It can provide you a competitive edge in such a dynamic industry as health technology.
Affordability without Compromises
It’s rather costly to hire developers, software testers, compliance specialists, and managers within the United States or Europe because labor rates are high. Offshoring your project to Eastern Europe, South America, or South and Southeast Asia may give you the same results but 40-70% cheaper.
Scalability as Required
The requirements of the healthcare sector vary according to situations. One may require many resources during the initial development process but may need fewer later during the maintenance phase. Outsourcing makes such a process much easier.
Focusing on Core Activities
The primary objective of a hospital and any healthcare organization should be healthcare delivery, not managing software development teams. Outsourcing enables the healthcare organization’s management to focus on core activities while the development process is taken care of by professionals.
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Outsourcing Models in Healthcare Software Development
The approaches above have different implications for how you’ll work together. Make sure to choose the right one, failure to do so may result in poor communication, delays in delivery, and non-compliance with regulations.
1. Project-Based Outsourcing
You agree on the requirements and timeframe of the project, and the partner provides a ready-made solution, for example, a certain software module, a fully-fledged application, or a specific integration.
2. Dedicated Development Team
You get a complete development team from the vendor, developers, QA engineers, designers, and even a project manager. They become an integral part of your internal development process. It’s one of the most common options for an outsource in healthcare.
3. Staff Augmentation
You hire individual professionals to work for your company, say, a senior developer, a compliance engineer, and a data analyst. They join your team as contractors and follow your team lead’s instructions.
4. Managed Services / Outsourced Operations
The vendor assumes complete ownership of that function, which could be anything from managing your cloud environment, performing your QA test cycles, to managing live system maintenance.
Onshore, Nearshore, or Offshore
Onshore: Same country. Most expensive option, but best for communication and less time zone complications.
Nearshore: Nearby area (e.g., a US company working with teams in Latin America). Best compromise between both cost-saving and time zone synchronization.
Offshore: Other continents. Largest amount of cost savings possible.
How to choose the right healthcare software development outsourcing partner?
Selecting a proper vendor may be regarded as one of the most essential steps in the whole outsourcing process. Follow these simple recommendations:
1. Ensure healthcare experience
Require proof of previous healthcare experience in developing healthcare software, such as EHRs, telemedicine applications, HIPAA-compliant software. General software expertise does not necessarily mean software development in healthcare.
2. Check their compliance
Are they aware of such regulations as HIPAA, HITECH, HL7 FHIR, and GDPR without looking them up? Are there dedicated compliance or security engineers employed by the vendor? Did the vendors pass third-party security audits?
3. Consider their ability to communicate efficiently
Examine their English skills, communication channels, meetings frequency, and the time zones in which they operate. Communication in the healthcare software field cannot be risky.
4. Look at their data security procedures
Ask for details about their data protection methods, data encryption, access control policies, and how the company deals with data breaches. Healthcare software should be developed only using enterprise-level security procedures.
5: Review the contract’s wording and IP ownership
Make sure you have ownership of the code. Go through all your NDAs, IP assignment agreements, and termination agreements.
6: Start small
Don’t just hand over a huge project right away; begin with a pilot engagement.
Challenges in Healthcare Software Compliance
And here comes the tricky part of healthcare software outsourcing – and the part where many companies make expensive blunders. Ensuring software compliancy in healthcare is not an easy task or even worse, not a simple one-time check. It should be included in each and every step of software development.
Main Regulations That Should Be on Your Radar
HIPAA (Health Insurance Portability and Accountability Act)
The cornerstone law regulating the use and security of Patient Health Information (PHI) in the USA. In case you develop healthcare software that interacts with patients’ information, HIPAA compliance cannot be overlooked.
Main compliance criteria regarding software include:
- Encryption of PHI when transferring and storage
- Access control mechanisms
- Audit log creation
- Business Associate Agreement (BAA) with every single vendor
HITECH Act
Provides additional protection of health information through strict penalties for violations. All vendors dealing with PHI need to be familiar with HITECH Act requirements.
Standards for HL7 and FHIR
HL7 and FHIR standards govern how information should be shared between different systems within the healthcare industry. All products used in any context of healthcare information sharing will need to be compliant with these standards.
GDPR (General Data Protection Regulation)
For any company operating within the European Union, or dealing with personal data of EU citizens, GDPR compliance will be required.
FDA Regulations (for medical devices/SaMD)
When a product qualifies as a Software as a Medical Device (SaMD), including applications with diagnostic capabilities or clinical decision-making features, it will require FDA approval.
SOC 2 Type II
This type of audit may not specifically pertain to the healthcare sector; however, for software companies working within this space, SOC 2 compliance is becoming more expected.
Did You Know?
The average cost of healthcare data breaches in the US was recorded to be $10.93 million in 2023, which is the highest compared to all other industries, marking a record of 13 years in a row as reported by IBM’s Cost of Data Breach report. Partnering with a compliant outsourcing vendor has become a necessity now.
Conclusion
The outsourcing of healthcare software development has now evolved beyond being simply cost-efficient to become a strategy for delivering high-quality solutions more efficiently by taking advantage of niche specialists who would take years to develop in-house.
Yet, in the healthcare industry, it is imperative not to compromise quality at any cost because compliance and security are of critical importance. Your outsourcing partner should either help your company achieve its goals and succeed or put it at great risk legally and reputation-wise.
Your outsourcing provider must be equally familiar with the convergence of technology and healthcare legislation as the rest of your staff. They must understand HIPAA guidelines, HL7/FHIR standard implementation, have excellent security practices, deliver on time, and be able to communicate effectively. Moreover, they must treat sensitive patient information the way you would treat it.
In short, outsourcing gives you a chance to deliver products more quickly and efficiently, yet only if you pick the right vendor, of course.
Frequently Asked Questions
What is healthcare software development outsourcing?
The phenomenon known as outsourcing healthcare software development involves working together with a third party in the process of developing healthcare software. These include but are not limited to electronic health records, patient portals, applications for telemedicine, applications for medical billing, and other similar solutions. The essential difference between healthcare software outsourcing and generic software development outsourcing is that the first one requires absolute compliance with regulatory standards (such as HIPAA, HL7 FHIR, and GDPR) due to the high value of the data being processed.
Why Outsourcing Delivers Better ROI?
The benefits of outsourcing healthcare software development include more effective use of resources through lower development costs, accelerated project timelines, and access to expert knowledge which may otherwise prove too expensive. Outsourcing saves on the expenses related to employing specialists on a permanent basis, providing for their work environment and training them in various ways. At the same time, well-versed health care software developers minimize the likelihood of costly mistakes and rework. The end outcome is a high-quality product created more quickly and at much lower costs than in-house development, particularly offshore.
How can outsourcing healthcare software development lead to cost savings?
The cost efficiencies are achieved from many angles. First of all, there is labor arbitrage, highly experienced professionals located in Eastern Europe, Latin America, or South Asia are available much cheaper than similarly skilled experts in the USA or Western Europe. Secondly, there will be no expenditures related to recruitment, benefits, and office space. Thirdly, healthcare software development firms specialize in this niche and, therefore, minimize any unnecessary work that may result due to non-compliance with regulations.
How to choose the right healthcare software development outsourcing partner?
First of all, check whether they have the experience specific to the health care sector based on real-life projects. Make sure that they are familiar with HIPAA, HL7 FHIR, GDPR, and FDA guidelines depending on what applies. Assess the quality of their communication skills, ability to accommodate time zones, and fluency in English. Probe deeper into their approach to securing data, handling sensitive information, and signing BAAs. Analyze carefully the terms concerning intellectual property and termination conditions in the contract. Lastly, initiate a pilot project.
Is nearshore outsourcing always better than offshore for healthcare projects?
No. Although near-shore outsourcing has benefits in terms of time zone proximity and culture proximity, there are certain instances where offshore outsourcing is just as efficient, even more so at times, provided that the organization has a high level of expertise in the healthcare industry and solid communication skills. What really matters here are not proximity and geographical location but expertise, security, compliance, and communications. An offshore group of experts based in Eastern Europe or South Asia with high levels of expertise in the field will always excel.
