Health systems are increasingly turning to managed IT services firms to relieve internal IT teams of maintenance work, but execution failures remain a primary reason contracts are terminated, a Feb. 20 report from KLAS Research found.
The report, based on 19 managed IT services purchase decisions captured between December 2023 and December 2025, found organizations are seeking scalable expertise, improved reliability and cost efficiency as they outsource service desk and application management services.
More than half of the validated engagements focused on supporting the electronic health record, with Epic cited most frequently. Other engagements involved practice management, enterprise resource planning, imaging, customer relationship management and IT service management systems.
Among more than 30 firms evaluated in the sample, CereCore, HCTec, Nordic, Impact Advisors and CTG, a Cegeka company, were most frequently considered and selected.
Organizations most often chose firms based on alignment and fit, expertise and depth of resources, preexisting relationships, credibility during the request for proposal process and cost, according to the report.
However, the most common reason firms were replaced was repeated failure to meet execution and service-level agreement expectations. Organizations cited slow response times, unresolved issues and increased oversight burdens as drivers for change. Limited strategic vision, engagement misalignment and price increases also contributed to replacement decisions.
The most common reason firms were not selected was a perceived lack of desired expertise or tools. Some organizations favored firms with deep specialization, while others sought broader health IT capabilities. Weak request for proposal responses, concerns about credibility, pricing and alignment also factored into decisions.
