Important Trends in Healthcare Outsourcing

by | Published on Sep 9, 2014 | Business Process Outsourcing

Healthcare OutsourcingThough the healthcare market in the United States is rapidly emerging, the market is faced with achieving conflicting objectives such as improved service quality and reduced cost. Healthcare providers (hospitals, nursing homes, physicians, and specialized therapeutic enterprises) and payers (commercial insurers, government insurer programs, and benefit management firms) are striving for greater process efficiency and effectiveness, which can be achieved with increased automation, improved and consolidated IT systems, reduced labor cost, and so on. Both payers and providers have found that outsourcing could be the solution to cutting costs and providing quality solutions.

In addition to cost reduction which is the most important factor, other factors driving the demand for outsourcing include process improvement, renewed focus on more strategic areas, improvement of non-core capabilities, access to external skills, better address regulatory requirements, avoid capital investment and access to new technologies.

IT and outsourcing advisory firm EquaTerra reported that on the provider side, the demand is more likely to occur at the back office IT and business process functions and operations.

Healthcare payers, according to the report, are following a broader schema that includes emerging and strategic business and knowledge process outsourcing services. Payers are facing the following challenges because of competition for bargaining leverage with hospitals and other providers, and focus on the scale associated with consolidated operations:

  • Mergers, acquisitions, and divestiture activity has increased demands on technical and support infrastructure
  • Infrastructure requirements and cost to update and maintain the systems is driving the need for innovation and transformation. Innovative solutions can help in reducing cost and minimizing expenses for all processes
  • Delivery and support requirements have increased with regulatory changes, government, complexity of offerings, and so on
  • Government payers have moved much faster than commercial payers in sourcing their operational support requirements
  • Privacy issues and confidentiality have has caused an increase in expense associated with delivery of services

Most of these challenges can be addressed by relying on a professional BPO company.

Key Findings of the Survey

  • Equaterra’s data on function and process areas is based on a poll of the top outsourcing service providers in the U.S. healthcare payer space coupled with its own market experiences. It was found that process areas with the highest level of buyer demand included claims and enrollment data entry and claims adjudication. The demand for imaging and data digitization, indexing and data entry in enrollment was seen to be quite high, though market maturity showed a shortfall in case of data entry.
  • Payers were found to be evaluating speed-to-market and cost reduction in those areas that offer value and payback to the organization via BPO.
  • Another finding was that buyer demand is outpacing supplier maturity. The key areas of outsourcing demand were areas such as knowledge services – reporting, planning and analytics – and cost reduction was seen to be the main driver of demand for these services.
  • Outsourcing companies felt that industry knowledge was the most important attribute required to compete effectively in the healthcare payer service market. Cultural fit was also seen as necessary for a successful relationship between the buyer and vendor. Past experience of the service provider was an important factor to take into account when entering into a BPO contract.

Overall, the survey showed that healthcare facilities and healthcare payers are increasing investment in outsourcing and relying more on BPO and KPO service providers. To succeed in serving these markets, BPO companies should remain sensitive to the specific challenges that their healthcare clients face. Other key factors required to compete include offshore capabilities, manpower and skills, IT skills and capabilities, and complementary support service offerings.

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