Vital Signs - July 2009

The Power of Outsourcing Healthcare

by Susan Chandler

    As businesses continue to streamline processes and run leaner than ever before, there are some service sectors that are seeing growth and business opportunities – outsourced service companies. Among a handful of industries transitioning services to outsourced personnel is healthcare – particularly when it comes to patient billing.

    It’s hardly a surprise that the healthcare sector is suffering alongside all other business sectors. However, at a time when this industry is taking one of its hardest hits due to new restrictions, budget cuts on Medicaid/Medicare and the increasing number of non-paying patients, physicians must consider how to cut costs in order to keep the doors open to patients.

    The prospect of outsourcing services is becoming an increasingly widely accepted management practice across the United States, especially in today’s new economy.

    For many business owners, the mere thought of having an outside entity take control of small portions of business operations can be a less than desirable idea to entertain. For many it’s the cost of the outsourced service company, the impact the transition may have on the business while making the change as well as the control and trust factor we face when making the decision to outsource. However, it’s surprising how easy the transition can be as well as how outsourcing a portion of operational processes may not only result in large cost reductions on running business on a day-to-day basis, but also serve as a catalyst for change and renewed energy within the business and staff.

    It’s not uncommon for physicians to lose up to 20 percent of their revenue due to inefficient internal processes and lack of staff support and experience to carry-out operations for the business. At any stage of economic health, this is money that simply cannot be left on the table for any business.

    Outsourcing services such as human resources, legal, accounting, marketing or billing helps to keep the focus the company’s core competencies, which in today’s market is critical to the success or failure of any business. In fact, outsourcing can increase revenues depending on the service. In outsourced medical billing, for instance, the employees are specialized in billing services and have the ability to obtain faster payments from insurance companies, which, in turn, can increase revenue each month for the company utilizing outsourced services.

    Common questions regarding outsourcing include cost saving projections, professionalism and how to manage and measure the results a business receives when outsourcing services to another company.

    Some good advice is to carefully evaluate the cost of keeping operational processes in-house. Consider all employee costs paid to see-through the process, overhead to house employees and materials, whether the process is efficient and whether their expertise can be better used for a company’s core competency. Doing a bit of legwork on costs will show you the differential between the energy and hard costs of keeping a service in-house versus outsourcing it.

    By outsourcing a service, a company can redirect the efforts of a handful of staff members to directly serve the product/service structure that is offered to customers. This means staff who may have taken on operational processes in the past as a fall-back position can now be front-and-center in the organization’s customer interactions and business development efforts instead.

    Another good tip is to commit to a minimum one year working agreement with the outsourcing company. After the agreement period has ended, evaluate the results and cost savings. The outsourcing company should have helped cut costs over hosting processes in-house and allow the company to focus on business. If this is not happening, look for another qualified outsourcing company and always ask for referrals.

    Outsourcing services is a smart business strategy that can give an organization a competitive edge in today’s market.

    It can drastically decrease costs to business owners while still allowing them to operate at the same level or better. And, with so many companies having to cut personnel in-house, outsourcing professional services is oftentimes the only way a company can maintain operations and survive in the new economy.

Susan Chandler
Susan Chandler is managing partner and president of Twin Physician Services.