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Pressures of value-based care reforms trigger sharp increase in clinical outsourcing partnerships

Some hospitals are actively enhancing their clinical product lines via outsourcing, which they say increases patient satisfaction.

Jeff Lagasse, Associate Editor

While one of the missions of value-based care is to tie reimbursement to clinical quality, an increasing number of healthcare leaders are considering using outsourced clinical services to free up the resources necessary to comply with VBC initiatives.

According to the latest survey on healthcare outsourcing conducted by Black Book Market Research, 90% of hospital leaders are continuing to evaluate whether to work with third-party vendors for cost-efficiencies in both clinical and nonclinical functions, as well as allowing hospitals to focus on value-based programming.

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.

And managed services firms have started focusing specifically on healthcare clients, essentially creating a market niche. Some vendors have bundled services that are relevant only to hospitals and inpatient groups including IT, clinical services and cybersecurity.


The opportunities to reduce clinical costs in past decades were mainly limited to anesthesia and emergency medicine. Today, hospitals cost structures are largely unsustainable. Some are actively enhancing their clinical product lines via outsourcing, which the survey found is increasing patient satisfaction.

Two of the most popular areas that hospitals are currently vetting are in the diagnostic imaging service lines -- teleradiology and medical imaging equipment -- as many hospitals lack the capital funds necessary to invest in new and replacement advanced imaging centers.

Outsourcing hospital processes to vendor partners has become a winning strategy for many organizations. In every outsourced services category surveyed, respondents reported service levels had exceeded expectations; 80% of all hospitals polled in 2019 to date maintained that assertion. Eight percent of clients reported dissatisfaction in 2018 in meeting expectations that forced contract terminations.

A very small number of surveyed executives, barely 2%, consider outsourcing an unthinkable option due to the anticipated reaction, both internally and externally, from staff, physicians and the community, unchanged from a similar poll in 2017.

Black Book's data seems to indicate that outsourcing agreements in healthcare provider organizations can be structured so they don't affect existing staff. They may also may stipulate the retention of existing staff into the incoming outsourcing entity.

A supplemental poll of 129 vendor executives last month revealed an average three-fold increase in request for outsourcing proposals since the fourth quarter of 2017 among certain clinical functions.

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

It's a matter of finding the right company with whom to partner, a decision that should balance peer recommendations and due diligence on hospitals' parts.


One area of hospital operations that's outsourced with some regularity is the revenue cycle, but a 2018 Crowe study found that it's not a financial no-brainer for everyone.

While hospitals that outsource revenue cycle collect more patient balance payments, getting the money takes much longer. For point-of-service collections from patients, insourced revenue cycles collected 16.45% of total patient collections; outsourced revenue cycles collected 19.68%. Self-pay after insurance collection rates for outsourced revenue cycles versus insourced were 38.72% versus 36.73%. That's not a huge difference, but the uninsured/self-pay collection cycle tells a different story: 109.4 days versus 76.3 for insourced.

Twitter: @JELagasse

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