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Strategic Outsourcing to Promote Health System Growth

For a health system or hospital, the decision to outsource any element of their services must be carefully considered. New technology makes it easier than ever for vendors and a care provider to stay in communication about outsourced services.  But, some decision-makers are still leery about quality control and efficiency once a set of tasks is handed over to a third party. As long as the hospital or health system finds a contractor they can trust, there are several clear ways that outsourcing can help a health system improve performance and profitability.

Historic Areas of Support

Two sectors where health systems have traditionally chosen to outsource at least a portion of their services are information technology and clinical services.

Healthcare IT outsourcing is growing so common that the industry as a whole is expected to be worth $50.4 B by 2018. Many hospitals choose to outsource roles like digital insurance coding and billing, data encryption and analysis, and even the day-to-day IT upkeep of the hospital.

On the clinical side, the most common areas where outsourcing can save costs and improve efficiency are in anesthesia, emergency department staffing, dialysis services, and diagnostic imaging. After outsourcing their emergency department staffing, Gray’s Harbor Community Hospital in Aberdeen, WA reduced their average wait time from 158 minutes or more to just 33. Before they outsourced, just under 7% of emergency patients left the ER without being seen–after outsourcing, that was reduced to 2.5%.

Revenue Cycle Management

More and more health care systems are also finding that outsourcing all or some portion of their revenue cycle management is creating increased efficiency and revenue capture.  This can be attributed to a number of factors. First, it’s all too common today for hospitals or health systems to make a costly investment in hiring and training an employee for a department like revenue management, only to have them leave employment within the first 90 days. A PwC analysis of the 2011-2013 workforce found that hospitals have the highest labor costs as percentage of revenue–45% as of 2011. The Robert Wood Johnson Foundation found that replacing non-physician and non-nurse staff can cost a hospital as much as 20% of annual pay.  By contrast, employees at a vendor that specializes in revenue cycle management like HCM tend to have much more longevity.  This increased experience means a hospital’s choice to outsource rev cycle management can both unburden the hospital of turnover costs and bring more seasoned, skilled professionals to take up the important task of maximizing revenue capture.

Rev cycle outsourcing also empowers hospital corporations to allow their vendors to take on the costly process of tech-oriented process improvements, rather than taking on those costs and inconveniences internally.  For example, despite the fact that a 2014 Black Book Study revealed that thousands of US hospitals of all sizes are now outsourcing some or all of their revenue cycle management, it also showed that around 80% of those hospitals’ CFOs only see the decision as a stop-gap solution until they can integrate a new technology to allow them to better move toward value-based reimbursement tracking or clinical integration with ICD-10 coding policies.  However, with a vendor that has already developed and implemented a tech and data analytics solution to track patient value and provide a portrait of each individual at every stage of the revenue cycle, this type of temporary, stop-gap outsourcing could be transformed into a permanent improvement to process and performance.

As the outsourcing trend in revenue cycle management continues, robust technology solutions offered by seasoned revenue cycle experts are guaranteed to bring hospitals more efficient revenue collection and provide a better experience for patients, who wish to connect and pay through a multitude of digital channels. If you’re curious about those kinds of solutions and more, don’t hesitate to contact us today.


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