Outsourcing Healthcare

According to research recently released by market research firm Black Book Rankings, about half of the 650 hospitals in a recent survey said they will outsource ICD-10 services when the new diagnostic and coding system goes online in October 2015.

As reported by HealthLeaders Media, the survey indicates that 19 percent of hospitals are outsourcing coding currently and that number is expected to rise as high as nearly 50 percent by the time the October 1 deadline approaches.

Complexity of the process – transitioning from ICD-9 to ICD-10 – is the primary reason for the trend, but that’s being driven by stressed health systems and lack of expertise in house. Black Book also pointed out that the trend is only exacerbated by EHR and technology implementations, managing compliance issues and optimizing reimbursements.

The survey found that hospitals now strongly rely on outsourcing services and responsibilities to consultants for a broad array of coding and clinical documentation services, as well as other tasks, such as HR management, IT implementation and management, and to help them create organizational efficiencies. According to Black Book, 25 percent of hospitals now outsource clinical documentation audit, review and programming, and that percentage is expected to increase to more than 70 percent by the third quarter of 2015, as hospitals adjust to the new codes.

In addition, according to the survey, transcription services are now outsourced by 63 percent of hospitals and are also expected to grow to more than 70 percent of providers as the ICD-10 deadline approaches.

Industry sentiment is that that productivity is expected to decline in October 2015 as “coding staff adjust to the new system … so the likelihood that a facility would need to outsource some coding work is very high.”

None of this information is really new, or surprising, though. In fact, it only verifies a trend that has been gaining steam since at least 2012. In fact, as far back as 2012, outsourcing to healthcare consultants has been top of mind, and a trend, at least according to a Healthcare IT News report from October of that year.

According to a report issued by research firm KLAS then, “the added work anticipated from meaningful use requirements, the pressure to achieve data sharing and the clock ticking toward the 2014 deadline for conversion of diagnostic and medical billing codes from ICD-9 to ICD-10 code sets has driven the demand for consultants, creating what some call a boom,” reported the magazine.

“Demand for meaningful use help has exploded, increasing competition between third-party consulting firms — most of whom are excelling in MU-related work,” according KLAS.

According to one hospital CFO interviewed for the KLAS study in 2012, “We were struggling to do the implementation ourselves, and I ultimately bit the bullet and hired [a consulting firm] to come in and help us get our act together. It turned out to be one of the best decisions of my professional career.”

Healthcare providers then and now are looking to consultants to partner with as they navigate years of upcoming regulations and potential policy changes. The Black Book study only verifies what is already known; that a current trend that is likely to continue for some time.

Though the scope of work is likely to change as the times change, health systems and hospitals are likely to continue hiring partners to manage portions of their operations or entire processes so that the caregivers can focus on providing care and quality. One thing is for sure, though: Hospitals across the nation continue to struggling to meet mandates, manage innovation, and improve quality and operational efficiency. Substantial business challenges prohibit them from investing in the necessary resources and technologies, and effectively managing their internal processes.

Even with the “new” news by Black Book, there is nothing new to report here, only further evidence of what everyone knows: Overwhelmed health systems are in search of quality, experienced partners to help dig them out of what is becoming an ever-more complex healthcare landscape with each passing day.

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