$1 out of every $3 spent in U.S. healthcare is spent on administrative costs – that’s a trillion dollars spent on administration. And while administration cannot be eliminated, it can be reduced. As a healthcare provider, reducing your administration time and costs can benefit your bottom line and help the entire healthcare industry.

If you’ve been following along, over the past three weeks we’ve covered three common ways that hospitals are attempting to tackle this problem, from hiring more employees, to implementing technology solutions, to hiring consultants. And in our final post of the series, we’re going to cover outsourcing as a strategy.

What Is Outsourcing In Healthcare? 

Outsourcing in healthcare isn’t new, but it is an increasingly popular approach. Outsourcing is when a healthcare system entrusts a third-party organization with a specific task or workflow – even entire job functions or departments can be outsourced. Anything that is not a core competency of a healthcare system could potentially benefit by being outsourced, with the right approach. For example, it is already common practice to outsource hospital food service, laundry, or laboratory services. 

But what about administrative work? How can that be outsourced? Outsourcing administrative work is becoming more common – one area where outsourcing has proven beneficial is medical billing. A professional medical billing company can take over and handle a provider’s entire billing process. But what are the pros and cons of outsourcing administrative work?

Tapping Into The Pros of Outsourcing 

The biggest benefit of outsourcing is that it frees up staff to focus on other initiatives, including patient care. For repetitive, menial work, outsourcing keeps employees from getting bogged down by the processes that interfere with the healthcare provider’s bigger-picture goals. But there are a lot of other benefits too: it can save money, reduce errors, and improve operations. 

Typically, outsourcing a task or process enables a healthcare system to take advantage of another company’s economies of scale. They will have developed a solution that is better and faster than how you are doing it, because it is their core focus. They will have the best technology, the most knowledge, and the focus to continuously improve. By leveraging another company’s expertise and specialization, a healthcare system can actually lower costs and improve the process through outsourcing. 

Cons of Outsourcing: The Process Can Be Difficult And Limiting

Outsourcing isn’t a magic potion that solves all administrative woes. Far too often, providers that outsourced certain functions even feel frustrated by its limitations. That’s because when you outsource, you lose direct oversight of the process. You have to place a lot of trust in the third party that work is being performed accurately and efficiently. A manager cannot walk down to someone’s office to ask a question or ensure that certain tasks are being completed on time. 

Outsourcing also limits your flexibility – organizations are often locked into a contract for a specific amount of time, money, and work. If internal priorities or needs change, your current contract may no longer work for you, but you could be stuck. It can keep your organization from being nimble and quick to adjust to change. 

Plus, outsourcing often comes with hidden costs, money and time. From legal fees to implementation or cancellation fees, makes sure you read any contract carefully and consider these costs when you evaluate potential savings from outsourcing. And even the best outsourcing company requires oversight and management from internal resources, which can end up eating more time than you anticipate. 

Lastly, outsourcing comes with additional healthcare privacy and security issues. The more people and companies that have access to a system, the more potential there is for a security breach. This is an additional risk to consider before outsourcing any administrative work.

Is Outsourcing For You?

Outsourcing has plenty of pros and cons, but only you can decide if it will work for your organization by understanding the potential pros and cons. And besides evaluating specific outsourcing companies, it’s also critical to compare outsourcing to other solutions, such as technology solutions. For a more complete list of potential strategies to evaluate when working to cut costs, make sure to check out our eBook, 6 Ways to Cut the Staggering Cost of Healthcare Administration. In it, we share six ways that healthcare systems are addressing these problems, the pros and cons of each, and how to choose the right approach for your organization. Download it today to learn more! 

If you’ve been following along, we’re on part three of our four-part series about different approaches healthcare systems are using to manage administration and costs. 

As healthcare grows increasingly complex, the mountain of digital “paperwork” continues to grow. It’s slowing down our organizations, overburdening our employees with repetitive, menial work, and harming the entire healthcare economy due to the wasted resources and money. But filing claims, checking eligibility, and all of the other various administrative tasks cannot simply be ignored. You may not be able to overhaul the system, but healthcare providers can streamline internal processes to save time and money.

Want to get caught up on the two methods we already covered? 

Part 1: Hiring More Employees

Part 2: Technology Solutions

This week, we’re discussing the option of hiring consultants. Many healthcare systems turn to consultants to provide objective perspectives and advice on potential internal inefficiencies and solutions. But what are the advantages and disadvantages of this approach?

At their best, consultants are knowledgeable experts that dive deep into your unique organization to find efficiencies. 

A good consultant will spend time observing, evaluating, and talking to staff to find inefficiencies and opportunities for improvement. They will work with you to develop short and long-term goals as well as strategies on how to get there successfully. This could include anything from reorganization, process engineering, or even implementing new technology solutions. 

They bring an objective perspective, creativity, and industry experience to your specific challenges. Consultants should have experience with and knowledge of cutting-edge technology, along with the pros and cons of each option, to help guide your organization to make the best decision. Their experience at other providers gives them a different viewpoint through which to judge your own organization’s strengths and weaknesses. And compared to hiring new employees, a consultant can be a cost-effective method for reducing overall costs, streamlining processes, and improving your bottom line.

Learning the Disadvantages of Consultants 

At their worst, consultants are expensive, time-consuming, and implement “solutions” that may not meaningfully move the needle. Most consultants require a lot of money up-front, without any promise or indication of what their output and impact will be. 

Here are just a few things to consider: if a consultant recommends that a healthcare organization implement a new software, for instance, the organization has to worry about licensing fees, software maintenance, integrators, implementation costs, internal expertise, managing potential break / fixes down the road, and more.

And even when implementing a new software could be extremely beneficial in the long run, the fiscal impact can sometimes be shocking – aside from the cost of technology and hours of staff time and resources wasted on the integration, if the technology doesn’t prove beneficial, the company has already made the investment. 

Whatever their solution, it likely requires enormous internal change for your staff. Before hiring any consultant, be sure they have had success in eliminating the healthcare-specific pain points your organization is experiencing, see what their timelines and solutions have been for other clients, and make sure it aligns with your organization’s needs. 

Consultants Are No Guarantee

Consultants can help cut costs, but it is no guarantee. Next week, in our final post in the series, we’ll discuss outsourcing as an option for reducing the administrative burden. Don’t want to wait? We’ve got our free eBook, 6 Ways to Cut the Staggering Cost of Healthcare Administration, that covers all this and more. Download it today to learn how other healthcare systems are tackling this problem and how to find a solution that will work best for your organization.

In this four-part series, we are sharing four common ways that healthcare organizations are attempting to manage the ever-growing administrative workload. In Part 1, we discussed the option of hiring more employees to tackle these duties. Unfortunately, that model is unsustainable and doesn’t address the root cause of the issue – the mountain of administrative work that defines modern healthcare. 

One promising solution, and one that many hospitals and health systems are working towards, is using technology to lessen the administrative burden and associated costs.

New Technology Can Streamline Administrative Processes And Increase Efficiency.

When we think of healthcare technology, we often think about the “sexy” innovations and breakthroughs like robot-assisted surgeries or remote patient monitoring devices. But technology can have a revolutionary impact on healthcare administration, too. By streamlining repetitive tasks, technology has the ability to increase efficiency, reduce time spent on administrative work, and even boost revenue by reducing human error.

For example, patient scheduling software has optimized physician schedules while reducing patient wait time. Many of these softwares automatically send out patient reminder emails or phone calls, reducing cancellations and no-shows. 

There is also inventory management software that tracks inventory, alerting hospital staff to shortages and expirations while also reducing the amount of inventory needed on-hand. 

But one of the most promising advances in healthcare administration technology is artificial intelligence and robotic process automation. Because so much of the administrative burden comes from data input overload from multiple systems, artificial intelligence can automate these mundane, but business-critical administrative tasks with speed, accuracy and ease.

Not All Technologies Are Equal. Make Sure The One You Choose Meets All Of Your Needs.

While health system leaders are increasingly turning to technology, there are many who delay embracing innovation or are afraid to be “first adopters.” Unfortunately, this is often due to bad experiences with new technologies in the past. 

There are lots of ways technology can go wrong: after all, EHRs were supposed to reduce administrative work by keeping all patient data in one place. Obviously, this didn’t go as planned. With system updates, employee training, interoperability problems, and regulatory and compliance needs, new technology can sometimes become more trouble than it’s worth without the right approach.

To make sure that a new technology actually streamlines operations and administrative work, you need to carefully evaluate the solution and the vendor. Choosing healthcare-specific vendors and “as-a-service” models are both good ways to mitigate your technology risk. 

That’s because healthcare-specific vendors understand the industry’s unique needs and security requirements, and they should have proven results at other, similar organizations. And choosing “as-a-service” models reduces upfront costs, sets a clear path to ROI, and ensures you will always have an up-to-date solution that works. 

Here at Olive, we believe that technology, specifically artificial intelligence and robotic process automation, are the best solutions for a healthcare organization looking to reduce the administrative burden. Technology can and should have a favorable ROI as well as other positive downstream effects on employee morale and patient satisfaction. But we know it’s not the only solution that healthcare systems are evaluating. 

That’s why we wrote the eBook 6 Ways to Cut the Staggering Cost of Healthcare Administration. Download it today for free to learn more about how other healthcare systems are addressing this problem and the pros and cons of each way, so you can figure out which is right for you and your organization. 

Four Ways Hospitals Are Cutting Administrative Costs: Part 1

Healthcare is becoming increasingly unaffordable – for patients, payers, and providers. And while there are many interrelated factors contributing to the problem, no one can deny that administrative costs have become unsustainable – the latest research has put the total cost of healthcare administration at $1.1 trillion dollars and growing. 

So how can hospitals and healthcare systems work to reverse this trend, helping not only their own financials but also the industry as a whole? 

In this blog series, we are going to take a look at four of the ways healthcare organizations are tackling their most costly administrative challenges. In this first part of the series, we are examining the strategy of hiring more administrative employees to handle the growing workload.

Why Hiring More People to Solve The Growing Healthcare Administrative Problem is Unsustainable

As the mountain of paperwork and administrative work increases, many healthcare systems hire additional employees or shift employee time to managing these repetitive tasks. But when your healthcare system grows, the administrative workload increases with it, and more and more employees are needed to handle the burden.

Not only does each employee add to your payroll costs, but there are other, more hidden, costs as well. Much of these administrative tasks are simple data processing – copying data from one screen or system into another. As employees become little more than data routers instead of valued contributors to organizational success, the inevitable human error that occurs in these processes lead to costly rework and even more time spent on administration. 

Back office employees know that administrative work is part of their job, but it extends to the front line of care as well. Doctors, nurses, and other clinical staff are spending increasing amounts of time on data entry and less time with the people who matter most – the patients. It’s no surprise that in this environment, healthcare employees feel burnt out and hospitals are struggling with turnover.

Low morale, high churn, and unfilled positions hurt your financials and result in lower quality of care. And as you lose employees and struggle to hire new ones, the backlog of administrative tasks continues to grow, leading to a vicious cycle. Without a strategy to actually reduce time spent on administration, hiring more people does not address the root problem. But if hiring more people doesn’t work, what are other solutions to the problem of cutting costs? 

You can check back in with us next week for Part 2 of the series, where we’re going to discuss innovative technologies that healthcare systems are leveraging. Want more information now? Read the eBook 6 Ways to Cut the Staggering Cost of Healthcare Administration to learn how others are tackling the growing healthcare administrative burden.