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The Pros and Cons of Outsourcing Healthcare

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Running a hospital with a full workforce of in-house staff and permanent part-time or full-time employees – including back-office teams – is no picnic. Scheduling, payroll, and HR, not to mention the daily ins and outs of documenting patient care and processing claims … it’s a lot for all healthcare organizations. That’s before you account for aspects such as profitability and post-pandemic regulations.

Starting to feel a slight pounding of the heart? Perhaps a little mild tachycardia and tinnitus to boot? You’re not alone. Healthcare management is known to cause stress in even the most hardened hospital worker.

That’s why so many medical service providers are choosing the outsourced route lately. The move from maintaining full-time in-person teams to outsourcing certain back-office functions can free up tons of time.

Not only that, healthcare outsourcing helps to address the new challenges posed by changes in technology as well as the tough economy. By leveraging that age-old economic idea of specialization of labor, as well as exchange rates with other countries, you wind up saving money and headaches.

Today, many hospital owners have changed their business model from an expensive, traditional, brick-and-mortar business to a lean, efficient, and cost-saving one that leverages medical outsourcing to fulfill admin-intensive labor.

Says Forbes, “the healthcare outsourcing market is projected to reach nearly $450 billion worldwide by 2023. And a recent survey of more than 500 hospitals and inpatient organizations found that 90% of healthcare executives are exploring cost savings through relationships with third-party vendors.” If you’re not doing the same and securing outsourced healthcare services for your own organization, you’re already behind.

The good news? It doesn’t have to be that way. In this post, we’re going to tell you all about how outsourcing healthcare can help you save money, reduce your own workload and that of your in-house team, and help you sleep better at night. We’ll cover what the hospital outsource model includes, commonly outsourced functions, and the pros and cons of outsourcing healthcare tasks.

Ready to say goodbye to ulcers and hello to better profits, patient care, and employee satisfaction? Read on.

What is Healthcare Outsourcing?

Healthcare outsourcing is the process of moving some or much of your back-office staffing to out-of-house service providers that can handle those functions — often utilizing international or offshore outsourcing.

Instead of hiring full-time staffing to take care of it for you, which usually means providing office space and benefits for them, healthcare providers instead send the work to outsourcing market contractors who deal with the hiring, HR, payroll, and overhead of those employees, nearly always at a much more affordable rate.

They complete the work remotely, then send you back the information you need, whether that’s a software or app update, finalized patient documentation, call center summary, or payroll report. With healthcare outsourcing, you no longer need to oversee nearly as many employees or their work functions.

While business process outsourcing (BPO) serves many industries, from manufacturing to finance and beyond, outsourcing healthcare has become increasingly popular for the benefits it brings to patients, nurses, doctors, and admin on the global healthcare market.

5 Reasons Healthcare Companies Use Business Process Outsourcing

In fact, outsourcing presents many benefits to specifically to the healthcare sector. From clinical services to ER visits, call center services to finance (and other tasks we’ll address in greater detail soon), almost every medical routine can benefit from some aspect of the cost-effective outsourcing model. To wit:

  1. Outsourcing simplifies the management role. Healthcare facilities are starting to engage in BPO more frequently because it means they have to manage less overall. Instead of managing every financial, document-based, and customer service duty in-house, they can send it off to a trusted service provider and reap the benefits.
  2. You pay less to complete the same tasks. While the best country to outsource healthcare depends on where you live and what you need, any country with a lower cost of living can save you money.
  3. Healthcare service contractors can leverage economies of scale. Because outsource partners focus on specific tasks, they get very efficient. Rather than generalizing, as a healthcare organization must without outsourcing help, they can specialize. This also means savings for you.
  4. You have access to a greater talent pool. With outsourcing, the world is literally your oyster. When you’re no longer limited to your own city – or even your own state or country – you can choose the actual best candidate for the job rather than the best one within the county line.
  5. Outsource providers offer healthcare companies cutting-edge technology. Software licenses are expensive, and when you have to pay for every system yourself, it adds up. When you leverage outsourcing for claims processing and other functions, you don’t have to purchase all of those user licenses yourself. Instead, you pay one bundled cost from your outsource provider.

That’s not to say it’s a perfect system. Before you decide whether it’s right for you, it is helpful to take a look at some of the specific pros and cons.

Pros of Outsourcing Services in Healthcare

While we’ve already discussed the benefits in part, let’s take a deeper dive now.

Outsourcing is Cost-Effective

While all of the above benefits can improve your organization, a vast majority of businesses hone in on cost savings. According to research, “Outsourcing helps companies experience significant savings and cost reductions in the rates vendors offer outsourced employees compared to in-house employees.”

For instance, “62% of companies reported 10% to 25% savings when they outsourced and the remaining 38% of companies reported savings as high as 40%.” That’s huge, especially considering the massive sums in which most healthcare services organizations deal.

A lot of this benefit comes from the relative difference in your economy and that of the outsourcing partners’. That usually means developing nations whose average salary is considerably less than the one in your country. The outsourcing partner doesn’t have to pay their employees as much, and those savings pass on to you.

By offshoring or nearshoring your operating costs (i.e. sending them to a country near you, in the same or a similar time zone), you can up profitability. You no longer have to pay for:

  • Full-time personnel salaries and benefits
  • Facility workspace costs, such as overhead for building space, electricity, and so on
  • Hardware, such as computers and workstations
  • Software, like licenses and SaaS subscriptions

Taken together, these considerably impact your ability to streamline your organization and make it cost-effective. When you pass them off, you can see those double-digit percentage savings too.

It Provides Access to Top Talent Pools

Outsourcing doesn’t only mean that you’re freed from the limitations of local talent pools. It also means that you can source full-time help from people who are trained by outsourcing partners to do just one job and do it extremely well. Plus, a good partner with provide you with ongoing metrics proving cost savings, so you don’t have to take it on faith.

Saves Time and Resources

Unfortunately, many doctors and nurses have to conduct time-consuming tasks such as documenting patient care, transcribing, and coding. This takes away from their time for offering valuable and life-saving services to their patients. With outsourcing, they can go back to giving patients their full attention.

Cons of Outsourcing Healthcare Services

Nothing in life is perfect, of course. Outsourcing healthcare services does also bring some challenges, so let’s take a look at them now.

HIPAA & Medical Record Sharing Concerns

As the Centers for Disease Control notes, the Health Insurance Portability and Accountability Act (HIPAA) was created to provide “national standards to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge.”

This makes it difficult for healthcare workers to simply send information off, either physically or digitally. In the sense that patient info should be protected at all costs, this is a good thing. But it does hamper your choice of outsource partner, meaning you need to ensure you’re meeting privacy law requirements both domestically and around the globe.

Happily, you can respect such regulations by ensuring you only work with organizations that are up to date on them. For instance, if you work with the right outsourcing matchmaker, you can find a HIPAA-compliant call center pretty easily.

Cybersecurity Concerns

Infrastructure setups differ from country to country. You can’t just assume that an organization will protect patient data, or that they’ll even have the ability to keep medical records safe. That puts the burden on healthcare systems to ensure they only choose healthcare outsource partners who can.

Transparency Issues with Outsourcing Companies

Healthcare BPO is great, so long as you have transparency. If you can’t talk to the exec team at the company, don’t know how they’re spending their time, or can’t get a straight answer about project capacity or how workers spend their time, it might not be a good fit. Remember, your goal is to keep quality care for patients top of mind, and you need all the information to do that.

Overall, though, you can manage all of these challenges by working with the right provider. Now let’s take a look at what kinds of services you can offload if you find that provider.

Specific Services Outsourced Within the Healthcare Industry

Wondering about the specific services that are commonly outsourced by healthcare companies? Here’s a quick look at some of the most common.

Healthcare IT (Information Technology)

Maintaining software systems, record-keeping, and cybersecurity protocols takes a full team. Let’s say you’ve recently updated a security protocol, for instance. Would you rather pay three professionals full-time salaries in the United States? Or half as much in a country such as India, the Philippines, or Mexico?

Claims Processing

The healthcare industry would not function without claims processing. When a patient gets a procedure and receives a medical bill, they then run it past their insurance company. Often, the hospital or clinic will run that surgery or colonoscopy first, before sending it on to the patient.

Either way, the healthcare company has to collate and provide a lot of information to one party or the other, which an outsourcing partner can collect and pass on for much less.

Human Resources

Managing personnel is never easy. When you bring on a new nurse, for instance, it means hours of paperwork, background checks, records-keeping, payroll updating, tax information collecting, and more. Why not have a outsourced provider do all the heavy lifting for you, so that you can focus on finding the best candidates for the job?

Medical Coding and Transcription

Medical coding is a huge part of healthcare. Medical coders are professionals who assess services and treatments provided, and translate those into codes that hospital finance and insurance teams use to determine coverage and billing.

Similarly, medical transcriptionists take raw patient notes recorded by doctors in audio form and transform them into tidy written reports. Both of these tasks are time- and resource-intensive, so outsourcing can save you lots of money on salaries and overhead.

Data Analytics

Healthcare IT (information technology) is critical today, as it is in any other industry. To ensure you’re making the most of your workflow, you need to gather metrics and compile incisive data analytics. Again, an outsource partner can help you here.

Outsourced analytics teams can review any captured data, collate it into useful reports, or even provide recommendations to optimize your organization’s workflows, efficiency, and patient outcomes.

Customer Support

Healthcare companies often have to take calls from patients, insurance providers, claims adjusters, and more. Because the healthcare facility is beholden to each of these audiences to continue to function, they can all be considered customers—and customers require service and support.

Unfortunately, this can mean a real drain on human resources if you’re not careful. BPO helps you address this concern by directing all types of services to an outsourced call center. From appointment setting, rescheduling, claims inquiries, bill payments, and more, trained reps can answer questions and assist callers with their needs, only sending the toughest or most intricate requests back to your office for expert assistance.

How to Find the Best Outsourcing Partners in the Healthcare Industry

As you can see, outsourcing BPO in healthcare can be incredibly beneficial for the organization’s bottom line. Again, though, that’s only with the caveat that you must find an outsourcing partner who is knowledgeable and experienced in your industry.

As this is of prime importance, it’s critical you don’t just “wing it,” whether you’re engaging in IT outsourcing or looking for help managing your revenue cycle. Instead, healthcare facilities need to find the right fit, with the right company, in the right country.

If you’re looking to build quality outsourcing relationships, TDSGS can help. We help healthcare directors find the right outsourcing partners every day and have assisted some of the biggest companies around the world, including Amazon, Verizon, and Microsoft. Rather than providing a cookie-cutter approach, our goal is to match you with the perfect partner for you.

Want to learn more? We’re happy to answer your outsourcing questions regarding call centers, medical records security, transcription services, or any other healthcare functions. Get in touch today!

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