June 16, 2016

Healthcare Outsourcing Planning and Benefits

By Mark Whittaker, Senior Manager, Assurance Services

Healthcare Outsourcing Planning and Benefits

Healthcare organizations need to be aware of ongoing and projected employment shortages for physicians and nurses, which have resulted in increasing demand for outsourced services. In fact, the Bureau of Labor Statistics has estimated that the United States will need more than 200,000 nurses each for the next two years1; primarily due to the increase in the national U.S. population, which is growing an average of 3.3 million people per year2.

The Association of American Medical Colleges estimates a shortage of 45,000 primary care doctors and 46,000 surgeons and medical specialists by 2020, due in part to increased numbers of older people (who need more care) and the addition of millions of people with health insurance from the Affordable Care Act (ACA). Some analysts say the shortages can be avoided through new models of team-based care that rely on non-physician clinicians – such as nurse practitioners and physician assistants—for primary care3.

Meanwhile, the status of nursing supply and demand remains uncertain. For years, experts have warned about looming nursing shortages. However, an article in the New England Journal of Medicine last year declared that these shortages have failed to materialize. At the same time, the article said future demand is uncertain. For example, a growing demand for nurse practitioners to fill the shortages of physicians may cause a shortage of nurse practitioners.

The AMN Clinical Workforce Survey found that 78 percent of hospital executives surveyed say they’re seeing a physician shortage now, while 66 percent say there’s a shortage of nurses, 50 percent see a shortages of nurse practitioners and physician assistants, and 43 percent note a shortage of allied healthcare professionals3.

In the survey, taken in 2013, more than 70 percent said that clinical staffing is a top priority. In the same survey in 2009, only 24 percent said the same thing, showing that concern about staffing hospitals with adequate numbers and quality of clinicians has increased significantly in a short period of time.

The increase in population in the United States can be expected to increase the demand for physicians and nurses. These shortages impact the overall U.S. economy and workforce, making healthcare harder to receive, increasing costs for services, slowing down workforce productivity and compromising care as less time is spent per patient. The increase in demand for patient care and decrease in the supply of physicians and nurses will lead to increased reliance on outsourcing and looking abroad to foreign workers to address these problems. These factors are likely to lead to an increase in healthcare delivery costs.

If planned in advance and managed effectively, outsourcing healthcare delivery can help address the shortages noted above and allow healthcare providers to provide important internal operational benefits, limit additional costs and provide for a leaner operation. Benefits of outsourcing include:

  • Improving health results through new program offerings.
  • Potential for reduced medical costs brought about by reduced operational costs.
  • Cost savings re-invested to finance new products and services.
  • Increasing patient revenue by providing leaner and/or additional services.
  • Improved patient satisfaction.
  • Overcoming barriers like time zones with a workforce that provides 24/7 service.

Healthcare organizations can maximize the benefits of outsourcing by providing more leadership training for team leaders who oversee contracted professionals, reducing staff levels, and employing more information technology resources to increase efficiencies. With strong team leaders, contracted professionals will have an easier transition into the hospital and a better understanding of its culture and processes. The ability to satisfy staffing needs will increase production and, if managed appropriately, maintain or improve service standards. The faster a hospital can service its patients without sacrificing culture and quality of care, the better the results and hospital reputation, which will ultimately result in more patient revenue. The ability to effectively plan, implement, and manage contracted professionals will prove critical to achieving these goals.

Outsourcing has proven beneficial to healthcare providers when planned, utilized and implemented correctly. Patients now have a wider selection of healthcare providers to choose from. Since patients are the main source of revenue for a hospital, it is imperative that a hospital provide quality services to attract future patients. Hospitals are constantly seeking ways to improve the services they provide. The constant need to improve and the increase in outsourcing opportunities have already led hospitals to utilize more specialized service providers, which will become even more important when the impact of projected staffing shortages is realized.

One critical area of clinical staffing is the transition from volume-based financial incentives for clinicians—how many patients are seen and procedures done—to value-based metrics such as patient outcomes, reduced readmissions, patient satisfaction scores, adherence to treatment guidelines, and other measurements.

Further, another method that hospitals can use to contain costs and increase efficiency is a management innovation that’s common in other industries but new to healthcare: managed services programs (MSP). MSPs deliver one source of management and billing for multiple healthcare staffing providers. Several hospitals have a large number of such providers for clinical practitioners.

Hospitals have become accustomed to outsourcing support functions such as food services, cleaning services, laundry services, administration services and other functions unrelated to delivering healthcare to patients. In this new environment, hospitals need to start planning for expanded outsourced activities and to approach certain aspects of healthcare delivery in the same manner.

Source: The AMN Clinical Workforce Survey

1. http://rnspeak.com/nurse-careers/nursing-shortages-this-2016-and-the-promising-salary
2. http://www.susps.org/overview/birthrates.html
3. https://www.amnhealthcare.com/industry-research

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