Budgets within Europe's public sector-driven healthcare industry are being stretched thin and IT is one particular area that is feeling the pinch.
Receiving only limited funds, it is becoming increasingly tough to assign adequate resources to the upkeep of existing IT services, according to a report by market analysts at Frost & Sullivan.
Most hospitals in Europe now lack the resources and skills to build IT infrastructure, maintain them, and train their staff to handle complex software packages.
This is a major problem, at a time when IT is now such a core part of the healthcare service, with IT touching every aspect of healthcare - from customer service to patient case management.
Under such circumstances, the only option emerging as a viable solution is to outsource the function, or subscribe to an application service provider (ASP), which can reduce the huge capital and implementation costs of acquiring new technology by a considerable amount, while at the same time improving service quality, said the report.
"Healthcare IT outsourcing is now a proven business model in Europe due to highly visible contracts such as those between Britain's National Health Service (NHS) and British Telecom (BT), as well as many smaller contracts in different countries in Western Europe," said the Frost & Sullivan analyst, Siddharth Saha.
"The NHS, through its deal with BT, has proven that IT outsourcing not only results in cost efficiencies for the government, but also paves the way to the establishment of hitherto non-existent infrastructure to provide information and services to the whole country," said Saha.
The trend towards IT outsourcing is also being fuelled by the attempts of many governments in Europe to modernise and improve its archaic IT systems, said the report titled "European Healthcare IT Outsourcing Market and Opportunities in ASP."
This push towards modernisation is long overdue, with Western European nations such as the UK, France and Netherlands long been following outdated, timely and costly healthcare processes.
Following Britain's lead, countries including Ireland and Spain are now rolling out large-scale IT modernisation initiatives, which Saha believes will pave the way for increased adaptation to the outsourcing model.
"With the increasing focus on network infrastructure and the large-scale integration in the healthcare sector, numerous healthcare-related applications are likely to be converted into an ASP-based format," notes the analyst.
"The healthcare ASP outsourcing market is likely to witness heavy consolidation before it reaches maturity."