Why Allina Health outsourced IT to Optum

Minneapolis-based Allina Health is sending hundreds of IT employees to work for Optum to boost its automation and artificial intelligence capabilities and improve the digital billing experience for patients, according to CIO Dave Ingham, DO.

The 12-hospital nonprofit system said Feb. 1 it would transition roughly 2,000 IT and revenue cycle employees to UnitedHealth Group's healthcare services arm.

Allina Health made the move to confront the "unprecedented care delivery challenges and new technologies emerging, both within the IT clinical spaces, but also within the patient financial experience," Dr. Ingham told Becker's.

Allina Health is the latest — and currently the biggest — health system to outsource IT and revenue cycle to Optum. Brewer, Maine-based Northern Light Health, Waukesha, Wis.-based ProHealth Care, and Owensboro (Ky.) Health entered into similar deals in 2023 (while St. Louis-based SSM Health ended theirs in January). Several other health systems have been moving their IT workers to outside vendors in recent months.

Dr. Ingham said the increased AI prowess could help most in the back office, predicting supply chain and staffing needs. But he envisions the Optum partnership eventually boosting patient engagement and marketing technology.

He said IT probably could have remained in-house; the bigger driver was the increasing complexity of patient billing.

"Revenue cycle is so dependent on technology these days," he said. "And there's such an emerging area of opportunity around interfacing with payers, delivering real-time financial information to patients in terms of estimates that are accurate, that actually tell you how much something will cost, understanding your copays, where you are in your deductibles. And then having an actual digital experience when you're making your payments.

"Healthcare has lived in the dark ages of paper-bill-every-30 days for so long. We're really digging in hard and investing in that digital financial experience. So sending both teams over, we think, does bring synergy and will enable a lot of new capabilities."

Optum is, of course, a sister company to UnitedHealthcare, the nation's largest commercial payer.

About a third of the 2,000 employees will be from IT, while approximately two dozen IT and revenue cycle staffers will remain with Allina. The ones that go to Optum won't see much change; they'll continue to work from where they do now, whether in the office or remotely.

Dr. Ingham said some employees are apprehensive; others are excited to be working for such a big, growing company as Optum. "We've gone to great lengths to work with Optum to make sure that benefits and salaries are identical or very, very similar," he said.

He said it's too early to tell how widespread of a trend this becomes in healthcare.

"Like anything, there are going to be early adopters, and there are going to be folks who are a little more cautious and reluctant," he said. "And so I suspect there'll be more organizations looking at these sorts of relationships. I don't think it's going to be a windfall or a dramatic number, but I suspect there'll be a fairly steady drift in this direction."

Allina Health isn't disclosing the monetary terms of the partnership but Dr. Ingham said he anticipates both "short- and long-term financial benefits." Optum has a "size and scale that is massive" with "processes for high-volume, low-complexity tasks that outpace anything that Allina — we're not small, we're pretty decent-sized — can deliver," he said.

He said he expects a little more turnover than normal during the transition but predicts the "vast majority" of the 2,000 employees will agree to work for Optum when the arrangement kicks off in May.

"It's really positioned as a partnership and a relationship where we're not just offloading a bunch of employees and telling them exactly what we want done," Dr. Ingham said. "It's a give-and-take. It's a back-and-forth. It's a shared vision and shared strategic plan. And obviously, Allina's mission is what drives the relationship, and Allina's needs and imperatives are what drive it.

"Figuring out complicated things like how we're going to handle our data center footprint and move things to the cloud — these big picture items, where no one really has it figured out — we think working together will make it better. It's more of a partnership than a traditional outsourcing relationship, at least from the different vendors that we've talked to."

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