Healthcare’s Biggest Misconceptions About Outsourcing

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By Kevin Nolan, HGS Healthcare

While COVID-19 has completely transformed healthcare globally, its implications on the U.S. healthcare system aren’t likely to dissolve when the virus does. Today, U.S. hospitals are losing an estimated $60 million per month, largely due to the 55% drop in patients seeking care during the pandemic’s peak in the U.S., according to data from Strata Decision Technology. 

Because healthcare’s financial crisis is poised to take a toll on both payers and providers for years to come, many are turning to unique business solutions to help them stay afloat. Outsourcing is at the top of the list, given its ability to help organizations streamline and modernize business processes, while bringing them closer to their customers.

There are many misconceptions about outsourcing and how it benefits payers and providers. Let’s examine a few of these.

MISCONCEPTION: Outsourcing is done overseas.

First, it’s important to understand that outsourcing is more common than many people realize and in fact, most companies across industries do some type of outsourcing. Whether that’s working with an accountant or tax firm, or someone who helps with auditing or legal affairs, these are, by definition, all forms of outsourcing. Put simply, outsourcing is the business practice of hiring an outside party to help perform services that traditionally are performed by the company’s own employees. 

There also tends to be some confusion between outsourcing and offshoring. These two words are not the same. While outsourcing can occur overseas (offshoring), it often occurs right here in the U.S. (onshore) or in neighboring countries in the Caribbean and Latin America (nearshore). In fact, some Medicaid and Medicare work is required to be done within the U.S. Companies can and often do outsource with a blend of delivery locations depending on the work they are looking to outsource, where the knowledge resides and where the right talent for the job is located.

MISCONCEPTION: No outsourcing partner knows my business as well as I do.

This isn’t necessarily untrue, but while an outsourcing partner may not know a client’s business as intimately as the client does, this is actually a key benefit of working with an outsourcer. In fact, while an outsourcing company may not know every detail of the business, they typically bring a breadth of experience and fresh perspective that’s extremely valuable – both from the client’s industry and also from outside the industry. For example, an outsourcer with experience in the retail sector can work to apply best practices in consumerism to a payer’s contact center. These best practices can in turn help boost member satisfaction and loyalty. When evaluating an outsourcing partner, payers and providers should look for experience in healthcare with organizations serving similar populations, such as number of covered lives or hospital beds, as well as unique experience outside the healthcare vertical or with different types of organizations in order to unlock a fresh perspective to make their business better. 

MISCONCEPTION: Outsourcing is all about cost cutting.

Although cost cutting is a major driver of outsourcing demand, its benefits aren’t limited to saving money. Many companies choose to outsource to gain access to specialized skills, functionality and/or experience that may not be available within their core business. It also allows companies to scale more easily. As an example, if a business operates in a heavily regulated industry that is now becoming deregulated, maybe competition for the customer has not traditionally been part of their core business in the past. This is where an outsourcing partner can bring the know-how and experience to customize a solution that makes them more competitive in the marketplace. Another example is during periods of high volume, such as open enrollment, payers have a need to scale up their staffing for an influx of customer service needs. Outsourcing providers have the scalability to help with seasonal ebbs and flows and can help provide that additional customer service capacity throughout the open enrollment period. 

MISCONCEPTION: Outsourcing means relinquishing control to an outside party.

It’s important to keep in mind that outsourcing is a partnership. It’s not about relinquishing control, but rather, working with a company with specific experience in driving business efficiencies to allow the client’s employees to focus on what they do best. In many cases, outsourcing even helps to increase the value and productivity of the in-house team. For example, a payer client recently came to us because their claims processing turn-around time was a significant pain point for them. By incorporating automation into their process, we were able to cut the turn-around time down from 3.5 days to just 3 hours. By introducing these efficiencies, we enabled the client to run their business more quickly and free up the in-house team’s time for other tasks.

Outsourcing is becoming an increasingly important tool in the payer and provider toolbox as they battle the financial crisis brought on by COVID-19, but it’s important to understand how it can be used most effectively to not only cut costs, but bring significant business value to drive efficiencies, skills and functionality and scalability.

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