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By 2022, Average Hospital Costs Must Be Reduced by 24% to Breakeven and Outsourcing May Be the Solution Says Black Book

C-suite, hospital boards and senior managers from 709 hospitals and inpatient organizations responded to a Q2 2018 outsourcing user survey.


News provided by

Black Book Research

May 07, 2018, 02:15 ET

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TAMPA, Fla., May 7, 2018 /PRNewswire/ -- C-suite, hospital boards and senior managers from 709 hospitals and inpatient organizations responding to a recent outsourcing user survey reveal that high-visibility initiatives are demanding more outsourced services to free up resources.

According to the latest survey on healthcare outsourcing conducted by Black Book Market Research LLC, 98% of hospital leaders are determining whether to work with third-party vendors for cost-efficiencies in both clinical and nonclinical functions and allowing hospitals to focus on value-based programming.

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Black Book Research
Black Book Research

Outsourcing technology, financial services, and facilities management services have been long established ways for hospitals to transfer day-to-day administration of noncore functions to outside vendors.  However, the drive to deliver value-based care at the highest quality is pushing nine of ten hospitals to consider outsourcing to provide clinical expertise, as well.

"Hundreds of outsourcing firms are creating a niche by specifically focusing on healthcare clients only," said Doug Brown, President of Black Book Research LLC and the author of the 2009 global bestseller "The Black Book of Outsourcing" (Wiley Publishers).

"Some 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."

The opportunities to reduce clinical costs in past decades was mainly limited to anesthesia and emergency medicine. "But now, hospitals have a cost 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," said Brown.

Two of the most popular areas that hospitals are currently vetting is in the diagnostic imaging service lines (Teleradiology and Medical Imaging Equipment) as many hospitals lack the capital funds necessary to invest in replacement, new and advanced imaging centers.

"Value-based care reforms have put pressure on hospitals to decrease inpatient volumes, achieve outcomes goals and provide cost-effective care. Clinical services outsourcing is the rage because it offers struggling hospitals with immediate alternatives," said Brown.

Outsourcing hospital processes to expert partners have become a winning strategy for many organizations.  In every outsourced services category surveyed, clients reported service levels had exceeded expectations in over 81% of all hospitals in 2017.

"Outsourcing in the healthcare industry doesn't get the same bad rap 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," said Brown. "In hospitals, there is a developed understanding of the broad spectrum of outsourcing options and how to manage vendors."

"As hospitals look for ways to reduce costs, outsourcing is a valid strategy to achieve a financially healthier organization. Caution should be given with the common pitfalls in healthcare when vetting or considering outsourcing," said Brown.

A very small number of surveyed executives (barely 2% of respondents) consider outsourcing an unthinkable option due to the anticipated reaction both internally and externally, from staff, physicians and the community it serves.

"For hospitals in financial danger with margin pressures placing the entire hospital workforce at risk, attacking margin by outsourcing one or more areas can actually save jobs in other core departments," said Brown.

Also, outsourcing agreements in healthcare provider organizations can be structured so they do not affect existing staff or may stipulate the retention of existing staff into the incoming outsourcing entity. 

A supplemental poll of 105 vendor executives last month revealed an average sixfold increase in request for outsourcing proposals since Q4 2016 among select clinical functions.

Hospitals are doing a much better job of assessing the need for outsourcing and selecting appropriate outsourcing vendors, but many executives still fail at managing the outsourcing relationship through key clinical, financial and operational performance indicators.

"It is a matter of finding the right company to partner with," said Brown. "Through research and background checks on the firms being considered including the vendor's history of partnerships with other hospitals."

4,595 client users of hospital outsourcing responded on customer satisfaction and experience in several functional areas. The top-ranked outsourcing vendors included:

ANESTHESIA DEPARTMENT – NAPA

BIOMEDICAL & CLINICAL ENGINEERING – TRIMEDX

CREDENTIALLING & PRIVILEGING – NEWPORT CREDENTIALLING

EMERGENCY DEPARTMENT – ESS INC.

ERP SUPPORT – ATOS

FACILITIES MANAGEMENT - ARAMARK

HOSPITALISTS – IPC, THE HOSPITALIST COMPANY

HUMAN RESOURCES DEPARTMENT SERVICES - PEOPLESTRATEGY

LABORATORY SUPPORT & RCM – XIFIN

MARKETING SERVICES – INFLUENCE HEALTH

MEDICAL IMAGING SYSTEMS – PHILIPS HEALTHCARE

PHARMACY DEPARTMENT – CPS (COMPREHENSIVE PHARMACY SERVICES)

PHYSICAL THERAPY & REHAB SERVICES - AGILITY HEALTH

RECRUITMENT PROCESS OUTSOURCING - AMN HEALTHCARE

SUPPLY CHAIN & DISTRIBUTION – OWENS & MINOR

TELERADIOLOGY – ARGUS TELERADIOLOGY

From the Black Book surveys also conducted in Q3 2017 on RCM and IT managed services, the following vendors also achieved top honors in outsourcing excellence:

CODING & ICD10 - OPTUM360

COMPLEX CLAIMS MANAGEMENT - REV CLAIMS

CYBERSECURITY SERVICES- BOMGAR

IT DATABASE & ANALYTICS SUPPORT – EXL SERVICES

IT DEPARTMENT - PHOENIX HEALTH IT

IT TECHNICAL SUPPORT SERVICES – CERNER

REVENUE CYCLE MANAGEMENT, FULL - OPTUM360

SMALL HOSPITAL BUSINESS OFFICE SERVICES - XTEND NAVIENT

About Black Book

Black Book Market Research LLC, its founder, management and staff do not own or hold any financial interest in any of the vendors covered and encompassed in the surveys it conducts. Black Book reports the results of the collected satisfaction and client experience rankings in publication and to media prior to vendor notification of rating results and does not solicit vendor participation fees, review fees, inclusion or briefing charges, and/or vendor collaboration as Black Book polls vendors' clients.

In 2009, Black Book began polling the client experience of now over 540,000 healthcare software and services users. Black Book expanded its survey prowess and reputation of independent, unbiased crowd-sourced surveying to IT and health records professionals, physician practice administrators, nurses, financial leaders, executives and hospital information technology managers.

"The Black Book of Outsourcing" (Wiley & Sons Publishers 2005, 2009) appeared on the business non-fiction bestseller lists of BusinessWeek, Barnes & Noble, Amazon and USA Today. It is available in seven languages worldwide and is listed as #70 in the 100 Top Books for Managers by International Business Editors Guild.

For Black Book vendor satisfaction rating methodology, auditing, resources, comprehensive research, and ranking data, see www.blackbookmarketresearch.com.

Related Files

05082018 HOSPITAL OUTSOURCING DEMAND SORTED BY CURRENT VETTING.docx

05062018 OUTSOURCING VENDORS RANKED BY ANNUAL REVENUE IN HEALTHCARE PROVIDERS.docx

Related Links

Black Book Market Research LLC Methodology & KPIs

SOURCE Black Book Research

Related Links

http://www.blackbookmarketresearch.com

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