Medicare payments to physicians for services performed began to shrink by 2% on Monday, April 1, 2013 under the automatic, across-the-board budget cuts called sequestration.  Can outsourcing some duties in the clinic help you off-set the reduction in pay?  I think so.  Saving money has always been one of the drivers for considering outsourcing, but it usually fell behind more strategic motivations, such as focusing on core competencies or freeing internal staff for other initiatives.  However, in these tighter economic times, more medical groups are turning to outsourcing as a means to reduce and control certain costs. Is it possible to save money through outsourcing? Of course! Are you guaranteed to save money if you outsource? Of course not!

To a large degree, your ability to save money depends on the structure of the deal and the experience of the outsourcer, but your group’s willingness to accept change is perhaps the most important factor. It’s important to remember the old adage, "Doing the same things with the same people in the same way gets the same results." To which we can add "for the same or even higher costs."

Gaining cost savings is not rocket science; it’s a matter of reducing workload, using resources more effectively, and releasing freed resources. The first two steps provide the means to free resources, but the actual savings come from releasing those resources.

Outsourcing to Reduce Workload

This step is obvious-if we do less work, we need fewer people resources. The trick is to identify and retain value-adding work, while eliminating extraneous and lower-value tasks like creating the physician call schedule. Physician scheduling may be a good outsource candidate because it is often the responsibility of a physician or administrator simply due to the complexity of the work and the consequences if done incorrectly. 

Outsourcing to Increase Efficiency

Once the workload has been reduced you will need to use that new found time efficiency to accomplish new work that has a monetary value back to the organization.  For example if your scheduler who is a physician can redirect the 8-10 hours per month of time spent creating, maintaining and communicating the physician schedule to billable patient care you will see an immediate benefit.  In the case of administrators it is a little more difficult.  Many administrators that have this duty assigned to them often do this work at home or on the weekend.  Extra unpaid work is often a contributing factor to burn-out and seeking new employment.  The cost savings recognized here may be not having to replace a burned-out administrator.

Outsourcing to Eliminate Resource Costs

The previous steps lay the foundation for cost savings. The actual savings are gained through one or more of the following method:

• Downsizing. Downsizing includes releasing newly freed staff members. Outsourcers can often transfer redundant personnel to other assignments.
• As more and more baby-boomers enter retirement age there will be more and more schedulers choosing to retire.  Outsourcing as a replacement plan to hiring a new scheduler will show an immediate savings.

If your organization has the management backing, political skills, and fortitude to implement the above steps internally, an outsourcing solution is likely to provide the greatest cost savings.

If pursuing outsourcing is your method of choice, find an experienced outsourcer who is willing to contractually guarantee cost savings across the life of the engagement. Be sure to review the approach the outsourcer will use to achieve the promised reductions. And remember, significant cost savings cannot be achieved without significant changes to the current physician scheduling environment.

Key Takeaway:  Outsourcing the physician call schedule can immediately save you money and possibly replace the 2% loss of revenue from the Medicare payments cut.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

Outsourcing the creation of your call schedule is very similar to outsourcing other critical business processes such as bookkeeping, website development, or computer/network support.  Although each business executive has different reasons for outsourcing, the one that tops most lists is to free up precious time to be spent on other higher priority projects. 

In my 16 years owning businesses I have outsourced several important duties. After I have made the decision to outsource, I have considered each of these 10 things to give me the best chance for success.

1. Clearly define the scope and schedule for your project. This might seem obvious, but any successful outsourced project always starts with a clear statement of what you are hoping to accomplish. Define your project requirements up front. Service providers need accurate, complete information to present you with realistic proposals and to quote you a reasonable price. Be specific about the deliverables you expect the partner to provide. Give new partners as much information as you can about what you need delivered and the way in which you need the work done. Also, be clear and realistic about your requirements.

2. Evaluate a service provider like you’d hire a full-time employee. When you’re evaluating proposals from service providers, don’t be afraid to ask questions. Just like hiring a full-time employee, selecting a partner is a very subjective experience. Check their references and ask for feedback from other clients who have used their services. Engage in a dialog – if you have any concerns about a vendor’s specific capabilities, voice your concerns.

3. Look for specific experience.  Ideally, the service provider you select will have specific experience with the type of project that you’re undertaking. You don’t want to be somebody’s “guinea pig.” This is especially crucial when outsourcing complex technical projects such as physician on-call scheduling. For example, if you’re looking for someone to create, maintain and communicate the on-call schedule, be sure they have done it for other satisfied customers. This advice holds true for other types of projects as well.

4. Don’t choose a vendor based solely on price.  Though it might be tempting, never select a vendor based solely on price. Experienced buyers who have outsourced many projects and evaluated hundreds of proposals almost always recommend discarding the highest-priced and lowest-priced bid. Buyers report that their most successful projects are the ones where they felt the partner offered a balance of good value and quality results.

5. Review portfolios and samples.  Examine the vendor’s previous work (their “portfolio”) and make sure that their previous work meets your expectations for quality and style. If you’ve evaluated a partner’s portfolio, references and previous experience and are still unsure of their capabilities, consider asking them to do a quick mock-up or provide a basic outline of a work plan. A service provider who really wants to win your business might be able to give you a rough concept so you can better understand their approach to solving your problem.

6. Don't start in emergency mode.  When engaging with a service provider for the first time, be sure that you are not looking for them to put out a fire.  In other words, don't wait until the last minute to make a decision, or give them a project that is late and due in a few days. Quality partners will want plenty of time to ramp-up so that they make a good first impression and do not make early mistakes.

7. Clearly define payment terms.  Just as you should be clear about project scope, make sure that you define a work plan for your outsourced project with clearly defined milestones. Having scheduled checkpoints where you review the status of the project as it works toward completion—is an easy way to ensure that you meet your final deadline and that the final product meets your standards. In some instances, like graphic design, website development and programming you may want to consider tying the payment to milestones. For other services such as accounting, on-call schedule creation and maintenance or HR services you will most likely be paying monthly.  In the beginning of monthly agreements be sure you can get out at the end of each month if the relationship is not working.  Do not sign a 1 year contract until you are comfortable with the quality of the person and the work.

8. Negotiate ownership of work up front.  Depending on the type of project (software, website, graphic design), make sure that you are clear about who owns the resulting work product and any important components of that product. Make sure the service provider understands how you intend to use the deliverables that they are agreeing to provide.

9. Don’t forget about support after the project is complete.  For technology projects, it’s a good idea to specify a warranty or support clause so that you are assured of some amount of continuing support from the vendor after the project is complete. It’s much easier to negotiate a support clause before the service provider begins work, rather than after the completion of the project. Even creative or business services can benefit from a support clause. Suppose you need some changes to a business plan based on feedback that you get from potential investors. Or maybe you find that you need that snazzy new logo delivered in a new type of file format. Specifying some amount of free support or negotiating discounted prices for future modifications can save you time, money and headaches later on.

10. Get it in writing.  During the course of a service engagement, the scope of the project, deliverables or even the agreed upon price may change. Make sure that you clearly communicate any schedule, scope or payment changes to your service provider and get confirmation from them - in writing - that they understand and agree to the changes. Similarly, keep a record of any agreement changes requested by the service provider and whether you accept or reject those modifications. Save copies of any email exchanges that you have.

Key Takeaway:  You can access top-notch expertise any time you need it without the overhead of hiring full-time staff. By staying focused on your core competencies and hiring expert outsourcing professionals for your other needs.

Administrators in the healthcare industry are facing increasing pressure to reign in operating costs and improve overall operational efficiency. This is driving clinics to more frequently consider and aggressively deploy alternative models (such as business process outsourcing (BPO) to deliver operational services.  The use of alternative service delivery models is growing for back-office operations as well as for core healthcare business functions and processes.  Although some consider this goal unattainable, the reality of the market is that administrators must consider how best to address the challenges.

According to one study by expert outsourcing advisory firm Equa Terra "One option healthcare organizations have at their disposal is to fundamentally overhaul the means through which they consume and deliver their core service offerings. The services addressed ... such as IT, finance and accounting, human resources and procurement as well as customer and business partner-facing services such as customer care/call center, claims administration, policy maintenance and enrollment.

EquaTerra estimates that – globally – 75 ITO and BPO healthcare deals with total contract values greater than $50 million were signed from 2004 through 2007. Approximately one quarter of these were BPO deals. This represents less than 5 percent of the total deals in the market, highlighting the relative immaturity of the healthcare outsourcing market compared to other industries, such as banking, financial services and manufacturing.

The healthcare industry faces unique outsourcing challenges, however, because of application and system integration challenges exacerbated by the highly regulated nature of the market. First, firms typically have older systems and applications in place. Second, there is overstaffing in back-office functions. Third, the industry has gone through change, and many of the firms have not adapted to the evolving business climate. Fourth, healthcare buyers are facing more financial challenges and need to continue to innovate and transform. Outsourcing is a catalyst for changing behavior and reducing “the fat“.

According to Equa Terra:

The top 5 drivers in outsourcing in the healthcare industry are:

1. Cost reduction
2. Process improvement
3. Refocus on more strategic activities
4. Jettison Non-Core Assets/Capabilities
5. Access External Skills

The top 5 key capabilities required to compete are:

1. Industry knowledge
2. Collaborative Approach/Cultural Fit
3. Site experience
4. Capabilities
5. People skills

As the scope of outsourced functions continues to expand, Adjuvant anticipates market growth in the outsourced call schedule/physician scheduling arena could grow much faster than expected. The top 5 reasons for this are:

1. It is too expensive to have physicians spending time creating call/work schedules.
2. It is too expensive to have practice administrators spending time creating call/work schedules for the physicians.
3. Many non-physician and non-administrative schedulers are part of the baby-boomer population that will be retiring in the next 10 years.  The experience that they bring to the table will be difficult to replace in a less experienced staff member.
4. A defined process can be created and deliverables clearly understood.
5. This work does not involve any patient protected data.

The healthcare industry in the United States, is under extreme pressure to reduce costs while also expanding services and maintaining high service levels. Addressing inefficiencies in delivering both back-office as well as core operational services can play a key role in addressing these challenges. While the healthcare industry has historically lagged other industries in its uptake of alternative service delivery models, this has begun to change.

Key Takeaway:  Some of the tasks in the clinic that you thought could never be outsourced, like call scheduling, can be, and very well might have an impact in your clinic depending on who and how it is done today.  Keep an open mind.

My company for years has been hymming and hawwing about offering an outsourced call schedule generation and publishing service to our customers.  I was finally able to convince our Board of Directors that this would be a great service to offer busy clinics and doctors who find this task to be one of the worst.  Here is some of the justification that I used when I was trying to sell the idea to my Board of Directors, perhaps you will find it useful if you need to talk with whoever makes these decisions in your practice.

Just so we are all on the same page, Outsourcing is the process of contracting a business function to someone else, according to website Wikipedia.  Typically the business function is something that is commonly performed in-house.  The concept of outsourcing helps firms perform well in their core competencies and reduces the rise of skills or expertise shortage in areas of the company. 

The top reasons for outsourcing call schedule creation and publishing;

1. Cost savings, the lowering of the overall cost of the service to the clinic.  Our schedulers are faster and more experienced than yours.  Therefore it costs us less to produce similar results.
2. Focus on core business, if your people are your most valuable resource, then free them up from tasks that do not generate revenue.  Let them focus on what is important.
3. Knowledge and wider experience.  With all due respect, our schedulers are more experienced than yours; because we have worked with so many different specialty groups we have seen-it-all.  This experience allows us to bring something to the table that you may have not had before.
4. Catalyst for change.  An organization can use an outsourcing agreement as a catalyst for a major change that could not be achieved before.  This is a perfect scenario for doctors who have been unwilling to change their rules and scheduling methods, making creation nearly impossible.  
5. Process improvement.  Most organizations do not have the physician schedule creation process documented.  If something happened to the scheduler, most clinics would be left with a big mess.  Outsourcing can improve a process by creating a standard way to achieve the same results and then documenting the process.  If you choose to take the schedule creation back in-house, most likely it would come to you in better shape than when you originally handed it off.
6. Take it back.  Outsourcing is not permanent; you can take back the work at any time.
7. Scalability.  With the consolidation of practices happening at lightning speed, it’s not a bad idea to think about how you would handle an increase in workload in the creation of oncall information.  

Call Schedule creation and publishing can be done remotely and delivered digitally and our company can leverage the scale and economy of outsourcing to deliver high value services at a vastly reduced end customer prices.  As you can see the reasons for outsourcing are plentiful, considering the low level of risk associated with a service such as outsourced on-call schedule creation, I think it is definitely worth giving it a try if your practice is constantly struggling with the horrible job of creating, maintaining and publishing the oncall schedule.