August 2021 Article 1

How Can Hospital Outsource Important Services to Outside Companies?

Hospitals have long embraced the practice of outsourcing some services to specialized companies. Much of this outsourcing is for nonclinical tasks such as laundry, information technology and cybersecurity, and outsourcing those types of services can boost efficiency and quality.
However, over the past few years there has been a fast-growing trend of hospitals outsourcing clinically relevant services – like anesthesiology and emergency medicine – to companies separate from the hospital. When that happens, hospitals relinquish some of the control they have over quality of care.
Emergency care
When you walk into an emergency room in the U.S., the physician who helps you might not work for the hospital you are in. Two-thirds of U.S. emergency departments use some sort of outsourcing, and more than half of practicing emergency physicians work not for a hospital but for separate companies called contract management groups.
The private equity health care model is to purchase private medical practices and consolidate them into a bigger firm that provides outsourced services, quickly increase the firm’s value, and then sell the firm for a handsome profit.
Contract management groups claim to streamline the recruiting and credentialing of emergency department staff to relieve hospitals of these tasks and, hopefully, lower costs.
When you get an MRI or an X-ray, having a radiologist interpret the results is often the most costly and time-consuming part of the process. The potential to speed up interpretation of results and cut costs has led many hospitals to contract with separate, off-site radiology services.
The practice is widespread: About 50% of radiologists say that they have interpreted imaging results away from where the images were taken and a quarter say that off-site interpretation is the majority of their work.
For smaller and rural health care systems that lack the resources to staff in-house radiologists, outsourcing may be essential.
Laboratory services
Another commonly outsourced service is bloodwork and other laboratory testing. Quest Diagnostics alone provides some level of lab service to about half of all U.S. hospitals.
Environmental services
Environmental services, previously known as “hospital housekeeping,” are a long underappreciated but key part of infection control in health care – even more so in the COVID-19 era. More than one-third of U.S. hospitals outsource environmental services.
Outsource intelligently
Health care is a unique service that must balance quality of care and people’s very lives with economic realities and profit motives. However, when profit becomes a singularly dominant goal, the best interests of patients, hospital staff and the hospital itself are jeopardized. Profit maximization does not align well with improving the safety and overall quality of patient care.
Many hospitals also are for-profit companies, but hospitals are more visible and financially accountable to the public. Outsourcing has a beneficial role to play in health care when used for the right reasons and with the right partners and guidelines. But when health care systems outsource clinically important services to external companies, there is a real risk that it can lead to patient harm, unhappy staff and higher costs. We believe that outsourcing should be used when it is the best option for all stakeholders, starting with the patients and staff.