Health systems underwent a rash of IT layoffs in 2024, while some outsourced their IT departments entirely. So what does 2025 have in store?
Health system IT departments met the same cost-cutting fate as other administrative back office functions in 2024, but there is no "fat left to cut" on the technology side, said Joy Oh, chief information and digital transformation officer of Cincinnati-based Christ Hospital Health Network.
"While overall IT staffing levels may not change much, the mix of skills and capabilities desired may change," she said. "I'm seeing the interest in pricey cloud and cutting-edge digital innovation wane while the demand for AI and automation support shows no sign of slowing down."
She added that the "outsourcing bubble" looks to be shrinking as health systems realize the value of institutional knowledge and staffing stability for IT speed and consistency.
"I would predict IT headcounts to either stay stagnant (for those that reduced in 2024 already) or go down (for those that had not yet done reductions)," said Saad Chaudhry, chief digital officer of St. Louis-based SSM Health. "The reason is because 2024 saw many health systems focusing on their technology cores to modernize their foundational tech, something I predicted around this time last year."
Most hospitals find themselves in one of three camps, he said:
— "You have already done the hard work of modernizing your core foundations and are now able to automate things, requiring less FTEs than you used to."
— "You are actively cutting back on the more-advanced things … to strengthen your foundations."
— "Your environment is complex enough and your operating margins healthy enough where you can either do both the advanced and foundational things or you do not yet feel the need to … renovate your foundational core."
Jason Joseph, chief digital and information officer of Corewell Health, dually headquartered in Grand Rapids and Southfield, Mich., said IT staffing moves in 2025 will be "health system-dependent."
"Some that are really struggling are going to have to make adjustments," he said. "There are some other markets where the finances are strong enough to allow the systems to continue to grow. For the most part, any system that is financially strong enough to be in that growth position isn't going to target their technology or digital workforce as a first step."
Industrywide, IT staffers who quit or retire will likely be replaced by investment in AI or other roles, he said. As for outsourcing, he expects it to happen more on a function-by-function basis rather than entire IT departments being farmed out.
"Full-blown outsourcing is a pendulum type of thing: You see some people send things out, then some other people bring some things back," he said. "[2024] was a year where some more went out. I think we're going to see potentially more of that, but also some more coming the other way."