Securing Physician Resources: A Business Case for Outsourcing

Posted on Mon, Apr 03, 2017
Securing Physician Resources: A Business Case for Outsourcing

As hospital and health system CEOs continue to see their organizations’ bottom lines being squeezed by a confluence of factors – declining reimbursement, demand for enhanced value from patients and payers, heightened focus on improving the quality of care and the overall patient experience – they are turning to a variety of tactics. One of the leading strategies is outsourcing for physician resources.

While outsourcing isn’t a new phenomenon, it’s taken on increased importance, especially as a way of decreasing costs, strengthening alignment with physicians and supporting efforts to improve patient care and operational efficiencies. Physicians also are seeking shelter from the growing financial and regulatory pressures bombarding their private practices. They are turning to employment arrangements with healthcare organizations (HCOs) via outsourcing companies or direct contracts with hospitals and health systems, many of which are beginning to offer the support of outsourced management services.

HCOs first dipped their toes into the outsourcing pool by contracting out their support services including environmental services and food services. Clinical outsourcing began more than 40 years ago when emergency medicine became a medical specialty. Today, the top five most commonly outsourced patient care services include dialysis, anesthesia, diagnostic imaging, hospitalist staffing and emergency department staffing1. In 2012, some 35 percent of all outsourcing agreements fell into this category, and the trend has remained steady over the past few years2.

How the Changing Environment Is Impacting Outsourcing

There’s no doubt the whirlwind of change that is engulfing hospitals is pushing them to look outside of their own walls for relief. Hospitals are being driven by a near-desperate need to reduce operating costs to cope with lower reimbursement rates, so they are increasingly turning to outside contractors.

Contributing to the historic changes taking place in the healthcare environment is the changing face of the physician workforce. In 2014, the Physicians Foundation conducted the Survey of America’s Physicians: Practice Patterns and Perspectives. More than 20,000 physicians responded to the survey, which found that there is a crisis in private practice with a strong migration toward the hospital employment model. The survey showed that solo practice volume dropped from 24 percent in 2012 to 17 percent in 2014. It pointed out the following challenges remaining in private practice – the administrative burden; the lack of access to capital; and the need to have communication with other physicians, physician groups and hospitals through large, expensive electronic medical records (EMR) systems.

What’s In It for Hospitals That Choose to Outsource?

How can an HCO determine whether to outsource services or keep them in-house? The Healthcare Financial Management Association offers these key questions to ask before making a final decision:

  • What barriers has your hospital encountered to achieving your business objectives? Why is outsourcing likely to solve a problem?
  • What are the sources, anticipated financial benefits, and true costs of outsourcing the function? Will outsourcing provide access to lower-cost computer capabilities? Will it provide lower labor and benefits costs (and if so, how will that be accomplished)?
  • What impact will outsourcing have on hospital employees? Will outsourcing provide additional benefits, better leadership, or more training? Will the outsourcing decision be viewed as a positive step or one that has to be “sold” within the organization?
  • How will outsourcing improve patient service and satisfaction?
  • With hospitals typically being one of the largest employers in a community, how will outsourcing affect the broader community?

Not only are an increasing number of healthcare organizations choosing to outsource staffing or practice management services in clinical areas, many are now realizing the incremental value of seeking one outside partner for several service lines. There are many reasons for this trend, including reduced physician recruitment and retention costs, improved operational efficiencies, strengthened alignment between HCO and physicians, accelerated development of physician leadership and improved clinical quality and outcomes.

“A hospital may be stuck, for example, on how to improve management of pneumonia patients,” says Francisco Loya, MD, chief executive officer of EmCare Hospital Medicine. “A local group of physicians only has a local perspective of the market. We have the advantage of working with hundreds of hospitals and health systems across the country, so we can identify best practices at similar size organizations and share those with our hospital partner or local practice. Because of our structure, we can immediately implement practice changes and monitor performance for achieving the desired outcomes.”

Other benefits of outsourcing include:
  • Access to resources
  • Better hospital-physician alignment
  • Leadership development opportunities
  • Improved metrics
  • Continuity of care/integrated services

EmCare and our parent company, Envision Healthcare, are changing the face of healthcare by pioneering solutions that increase the quality and experience of care while simultaneously reducing costs. By marrying our leading hospital-based physician group with the largest EMS and medical transportation organization (AMR) and launching a cutting-edge mobile integrated healthcare organization focused on post-acute care and intervention (Evolution Health), we are positioned to be on the leading edge, driving solutions for the future-state of healthcare.

Hospitals continue to seek opportunities to work with strong partners to protect their bottom line. Outsourcing physician resources offers benefits to patients, physicians and HCOs. Outsourcing has become an important thread woven into America’s delivery of healthcare and will continue to help hospitals and health systems achieve sustainable improved performance.

To learn more about outsourcing, download EmCare’s recent whitepaper on the topic.

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