Black Book Market Research suggests that Outsourcing may be the solution to Reduced Hospital Costs
Nearly 98 percent of hospital leaders are trying to determine whether to use third-party vendors for cost-efficiencies in both clinical and nonclinical functions, according to a survey conducted by Black Book Market research LLC.
In 2018, only 18 percent of hospitals had an established revenue cycle management outsourcing project in effect. However, that percentage was up from only 11 percent just three years prior.
Despite outsourcing, financial services, and facilities management services being long established in the healthcare industry, nine out of ten hospitals are considering using outsourcing options as a means to produce value-based care.
The survey suggests that 94 percent of hospital leaders are considering enterprise resource planning (ERP) outsourcing in 2019, which accounts for an 85 percent boost since 2015.
“Hundreds of outsourcing firms are creating a niche by specifically focusing on healthcare clients only,” said Doug Brown, president of Black Book Research LLC. “Leading vendors have recognized the need to bundle services that are only relevant to hospitals and inpatient groups such as IT, cybersecurity, clinical services, analytics and health facilities management.
“Now, hospitals have a structure that is not sustainable, and some hospitals are making the decision to actually enhance clinical product lines by outsourcing to power up volumes and improve health consumer satisfaction.”
Healthcare outsourcing has been primarily isolated to anesthesia and emergency medicine, according to the report. However, those organizations who do have outsourcing practices have found it to be a winning formula. Client reports service levels have exceeded expectations in over 81 percent of all hospitals in 2017, according to those outsourced services being surveyed.
“Outsourcing in the healthcare industry doesn’t get the same bad rep other sectors experience such as banking, insurance, tech and call centers where negative stereotypes associated with offshoring and/or full function outsourcing were largely misinformed,” Brown said. “In hospitals, there is a developed understanding of the broad spectrum of outsourcing options and how to manage vendors.
“As hospitals looks for ways to reduce costs, outsourcing is a valid strategy to achieve a financially healthier organization.”
Hospitals are starting to see the beneficial need for outsourcing and selecting an appropriate vendor, as a poll of 105 vendor executives revealed an average six fold increase in outsourcing proposals since Q4 2016 among clinical functions.
A poll of 105 vendor executives showed an increase in outsourcing proposals among clinical function due to healthcare companies seeing the benficial need for them.
Although it sometimes seems like hospitals may be tentative to make the transition, outsourcing agreements in healthcare provider organizations can be structured in a way that it does not affect staff, but instead stipulate the retention of existing staff into the incoming outsourcing entities.
“It is a matter of finding the right company to partner with,” Brown said. “Through research and background checks on the firms being considered including the vendors history of partnerships with other hospitals.”