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Can Outsourcing Save Struggling Hospitals?


Anyone working in healthcare finance knows all too well the struggles US hospitals have been facing for years, only recently intensified by the COVID-19 pandemic. In fact, a recent report issued by Kaufman Hall indicates that at least 39% of hospitals are likely to experience negative operating margins in 2021 – a number that could go as high as 50%.

Furthermore, the report painted a dismal picture for hospitals, forecasting that by year’s end, hospital margins could be 10-80% below pre-pandemic levels. Experts estimate that rural hospitals may be hit the hardest. The report says these metrics will vary based on how quickly each hospital’s inpatient, outpatient, and emergency department volumes return to normal; the availability and speed of vaccination; and the rate of COVID-19 case decline based on a combination of herd immunity and continued social distancing.

With so many variables to consider, health systems are looking for creative ways to improve the bottom line.  While most hospitals are looking to streamline their revenue cycle, others are looking for ways to cut costs internally.

The Value of Outsourcing

Even during good financial times, outsourcing brings a wide variety of benefits for busy health systems. Options for outsourcing include a broad range of ancillary functions such as medical billing and coding, clinical documentation improvement efforts, patient call center operations, collections, or specialty consulting services such as those around the shift to value-based care, risk adjustment services, revenue cycle management/improvement efforts, and much more.

Outsourcing Brings Benefits

If you’ve not considered outsourcing before, or you’ve ruled it out in previous years, now may be the time to evaluate the potential benefits of outsourcing one or more revenue cycle management functions. Here is a quick overview of the many benefits that hospitals and health systems may experience from outsourcing:

  • No need to invest in the technology. Having in-house access to the best-of-breed technology requires a significant investment in both service and support, and the world of software is always changing. By partnering with an outsourced vendor, those costs (and decisions, and training, etc.) are all taken off your plate. Leveraging the technology utilized by your vendor partner also often provides greater data/analytics with less IT expense in both hard costs and support staff.
  • Save on training and continuing education costs. Staying up-to-date on the latest regulations in medical billing, coding, value-based care, risk adjustment, etc. is extremely time-consuming. It requires an ongoing commitment to training and continuing education that often requires travel expenses, time away from the office, etc. With outsourcing, you can leave all of the training and latest in best practices up to your partner with minimal financial impact.
  • Reduce management expenses. While outsourcing isn’t intended to fully replace your in-house RCM teams, it can help reduce costs related to labor, employee benefits, etc. In many cases, outsourcing can eliminate the need for layoffs – and employees whose roles are outsourced can often be shifted into other positions throughout the organization which also reduces recruitment and hiring costs.
  • Guaranteed quality. With an outsourcing agreement, hospitals can employ a service-level agreement to set certain quality requirements that must be met under the contract terms. Depending on the function(s) being outsourced, examples could include key performance indicators (KPIs) such as coding accuracy, denial rates, total A/R over 120 days, and improvement in DSO and timely appeals, etc.
  • Scalability without the need to hire. With volume fluctuations often varying for hospitals on a regular basis (seasonal, etc.), many have to “staff up” for the highest volume times – resulting in higher labor, recruitment and hiring costs. In addition, many areas within the revenue cycle are difficult to hire for, as there is particularly a shortage of highly-skilled medical coders, among others. When you work with an outsourced vendor, your external teams can scale up or down quickly based on volumes and/or workload without the need to invest in recruitment and/or hiring expenses.
  • The ability to focus on patient care. Hospitals should be able to focus on what they do best – deliver exceptional patient care. Everything else is ancillary to this core mission, and outsourcing often provides hospitals with the resources and flexibility to focus their efforts on the clinical side of the business – investing in direct care resources, staff, equipment, and technology that might not be possible otherwise.

GeBBS Healthcare Solutions is a KLAS rated leading provider of Revenue Cycle Management (RCM) services and Risk Adjustment solutions. GeBBS’ innovative technology helps clients improve financial performance, adhere to compliance, and enhance the patient experience. To learn more, visit gebbs.com or request a consultation to get in touch with one of our solutions experts.

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