The Evolution of Outsourcing in Healthcare: Should Hospitals Be More Like Startups?
Now more than ever, hospitals and health systems face mounting pressure to deliver high-quality patient care while maintaining financial viability. This dual mandate has driven many to consider outsourcing as a strategic tool to streamline operations, reduce costs, and enhance service delivery.
According to Research and Markets, the global hospital outsourcing market, valued at $375.1 billion in 2023, is projected to increase to $612.24 billion by 2027. This trend is particularly pronounced in the U.S.
The increasing popularity of outsourcing begs the question: Should hospitals and health systems transform to operate more like startups, focusing intensely on their core competency of patient care while successfully outsourcing non-core activities?
The Rationale for Outsourcing in Healthcare
Outsourcing in healthcare encompasses a wide array of services, both clinical and nonclinical.
Nonclinical services that are commonly outsourced include housekeeping, food and nutrition, patient transport, medical billing and coding, claims processing, medical record transcription, IT management, accounts receivable, and supply chain management.
Clinical outsourcing can range from entire departments to specific functions such as virtual command centers.
But the primary reasons for outsourcing in our current environment are financial sustainability, efficiency, and the widespread healthcare staffing issues across the country.
Financial Sustainability and Efficiency
In a recent article by Managed Healthcare Executive, Abby Johnson, a partner at EY, highlights that health systems are increasingly focused on financial sustainability, leading administrators to consider outsourcing more often as a solution to achieve economies of scale and improve service efficiency.
If certain departments are underperforming, outsourcing the tasks those departments oversee can help hospitals direct more resources and attention to patient care.
Addressing Staffing Shortages
According to a Health Workforce Analysis by the Health Resources and Services Administration (HRSA), a shortage of 78,610 full-time registered nurses (RNs) is predicted by 2025.
The nursing shortage is reflective of a wider shortage of healthcare professionals, including physicians, and these issues significantly exacerbate the challenges faced by hospitals and health systems.
Nonclinical Outsourcing
Hospitals and health systems have been using nonclinical outsourcing services for decades. Today, companies like HHS, a hospitality and support provider across a wide range of industries, offer a suite of services, including housekeeping, food, facilities management, patient transport, healthcare technology management, and linen and laundry services.
Outsourcing nonclinical services can provide significant benefits:
Cost Reduction: Specialized service providers can achieve economies of scale, reducing costs for hospitals.
Enhanced Efficiency: Expertise in specific areas allows for more efficient service delivery.
Focus on Core Competencies: Hospitals can concentrate on patient care, their primary mission, by offloading ancillary services.
Clinical Outsourcing: Navigating Complexities
Clinical outsourcing presents a more intricate scenario. While it offers potential benefits such as alleviating staffing shortages and expanding service offerings, it also introduces challenges related to quality of care and patient billing.
However, as the landscape becomes more complex, innovative healthcare companies are emerging that offer high-quality, specialized solutions for the clinical functions of health systems and hospitals.
For example, hospitals can contract with external groups to provide physicians and other staff within a particular clinical department, such as emergency services, anesthesiology, or surgery. This can help ensure consistent coverage and access to specialized expertise.
Additionally, as telehealth has rapidly expanded since the pandemic, telemedicine and virtual command centers are increasingly outsourced to provide patients with access to specialists and timely care, especially in underserved areas.
Considerations and Best Practices in Outsourcing
Health systems contemplating outsourcing must conduct thorough evaluations based on economic and performance metrics.
Key considerations include:
Expertise vs. In-house Capability: Determine whether the required expertise is available internally or if it can be more effectively obtained through outsourcing.
Hybrid Models: A hybrid approach, where leadership is outsourced but local employees are retained, can offer a balanced solution.
Change Management: Transitioning to or from outsourced services requires robust change management, technology integration, and governance frameworks.
The Startup Mindset: Streamlining Healthcare Operations
To thrive in the current healthcare environment, hospitals must adopt a startup mindset characterized by agility, innovation, and a relentless focus on core competencies. Here’s how this transformation can be achieved:
Streamlined Operations: Like startups, hospitals should aim to streamline their operations by outsourcing non-core activities. This reduces administrative burdens and allows for more focused resource allocation.
Innovation and Adaptability: Embracing innovative solutions such as telemedicine, remote patient monitoring, and AI-driven diagnostics can enhance patient care and operational efficiency.
Patient-Centric Focus: Startups excel by maintaining a laser focus on their primary mission. For hospitals, this means prioritizing patient care above all else, ensuring that all processes and services support this goal.
Lean Management: Adopting lean management principles can help hospitals eliminate waste, improve service delivery, and reduce costs. This involves continuous process improvement and leveraging technology for better outcomes.
How Zivian Health Supports Healthcare Organizations
Zivian Heath’s mission is to make it easier for healthcare organizations to stay focused on providing care to patients.
The biggest challenge to scaling and empowering a healthcare workforce with Advanced Practice Providers is navigating compliance regulations and maintaining quality. Zivian and its proprietary software solutions support both independent providers and healthcare organizations by providing services that reduce efforts detracting from patient care.
Fundamentally, Zivian’s technology and tools enable healthcare organizations to quickly activate their workforces while overseeing compliance and quality assurance in an efficient way. In addition, we actively collaborate with our partners by request to open doors to a diverse range of operational efficiencies.
By providing exceptional support for our partners, we aim to also support healthcare’s “invisible stakeholder” – the patients they care for.
Conclusion
The trend of outsourcing in health systems and hospitals is a reflection of the broader need for efficiency and sustainability in healthcare. By strategically outsourcing non-core activities, hospitals can focus on their core competency of patient care, much like startups.
This shift not only enhances service delivery but also ensures that hospitals remain agile and resilient in an ever-changing healthcare landscape. As the outsourcing market continues to grow, hospitals must carefully evaluate their options, embrace innovative solutions, and prioritize patient-centric care to succeed in this new paradigm.
Sources
Managed Healthcare Executive: “Why DIY? Hospitals Are Outsourcing Clinical, Nonclinical Services”
Health Resources and Services Administration (HRSA): Nurse Workforce Projections, 2020-2035
