CHMB - Factors to Consider When Outsourcing

In today’s healthcare environment, many medical practices are finding it more challenging than ever to successfully manage their day-to-day business operations. Even with the assistance of an office manager or administrator, it can be difficult to grow revenue, control expenses and remain compliant with government regulations using only in-house functions. Many practices choose to outsource administrative and information technology (IT) functions in order to improve performance and simplify operations.

Reasons for Outsourcing
By transferring the management and/or day-to-day execution of business functions to an external service provider, medical practices can reduce administrative costs, increase revenue, improve the quality of the processes being outsourced and avoid the staff-management responsibilities that come with handling those functions internally.

Commonly Outsourced Functions

Billing
Coding
Transcription
Payroll
Accounting
Management
IT support and maintenance
Human Resources

Choosing What to Outsource
Virtually every aspect of a practice’s operations can be outsourced, but that doesn’t mean that every function needs to be handed over. The practices that benefit the most from outsourcing give careful consideration to which services can be improved through outsourcing before they transfer responsibility for those functions.

Following are key questions to consider for several frequently
outsourced functions:

Billing
It’s important to evaluate your practice’s collection rate against the percentage of revenue being spent on the practice’s billing operation. At first glance, outsourced billing might appear to be more expensive than keeping it in-house, but the enhanced performance generated by an outsourced service will more than make up for any additional expense. In determining if your billing operation is a good candidate for outsourcing, practices should ask:

Is our collection rate acceptable? Is it holding steady, rising or declining?
How high are our accounts receivable, and what are our A/R trends?
What is our claims-denial rate?
Is cash flow acceptable?
Do staffing requirements hold steady, or are new employees frequently needed?

Information Technology Support and Maintenance
The potential returns from today’s IT systems are greater than ever, but the complexity of deploying and managing IT solutions has increased as well. Many practices have turned to application service providers (ASPs) to avoid the administrative hassles and capital costs of buying and maintaining new software systems. ASPs charge a monthly fee in exchange for access to software of all kinds via the Internet. Before outsourcing any IT functions, practices should ask:

Which tasks, from database and server maintenance to daily backups, do we benefit from keeping in-house?
How well is our business software performing, and are we overdue for any hardware and software upgrades?
Are there new software systems, including electronic health record and practice management systems, that could benefit our practice?

Identifying Outsourcing Services
As with any business relationship, the right references are crucial. Any outsourcing service should freely share references. Look also for endorsements from medical societies in the geographic areas where the service does most of its business. When discussing services, keep these key questions in mind:

Is information transparent? Will we have access to the medical billing system and full access to all information?
Which specific reporting information will be provided to our practice?
Will the service modify any of their functions to suit our practice workflows?

Factors to Consider When Outsourcing

Products and Services