BHN works with urology, ObGyn, urogynecology, and gastroenterology practices all across the U.S., providing a range of in-office diagnostic services. These diagnostic services typically include equipment, supplies, staffing, and interpretation software. BHN partners with its clients to help them succeed. BHN's delivery approach is broadly considered outsourcing. Almost every industry outsources certain aspects of their business, and the healthcare industry is no exception. Outsourcing can be very beneficial for any business. It can reduce costs, increase quality, save time, and it can even provide for additional competitive advantage. While the healthcare industry does do its fair share of outsourcing, it tends to lag other industries. (Note: by outsourcing we mean outsourcing to a qualified local vendor – not sending work overseas). Medical billing, HIPAA compliance, and a few other areas have been thoroughly embraced as functions to outsource, but other areas such as patient scheduling, specialty diagnostics, and new patient acquisition have not seen the same level of uptake. Michael Porter, the famous Harvard Business School professor, has written extensively on outsourcing and one of his more recent and applicable quotes below summarizes how BHN thinks about the outsourced urodynamics and anorectal manometry services we provide:
“Outsourcing to other locations and countries creates transaction costs and inefficiencies that can offset lower wage and input costs. Capable local suppliers help firms avoid these costs and can reduce cycle time, increase flexibility, foster faster learning, and enable innovation.” Click here to see full article.Michael Porter, Harvard Business School
There are numerous reasons for pursuing outsourcing and for not pursuing outsourcing, and a few of the most significant are discussed below.
Biggest Reasons for Outsourcing in the Healthcare Industry:
- Cost Reduction: Cost reduction is typically the leading driver of most outsourcing decisions. If significant cost can be saved by outsourcing, the decision is often called a “no-brainer”. The methods of cost reduction can be numerous. At BHN, our cost reduction is achieved by using advanced proprietary software that makes us more efficient and by being extremely efficient at the diagnostics we provide. Our specialization in urodynamics and anorectal manometry has given us scale in these areas and allowed us to move down the learning curve to a point that most other organizations can’t reach.
- Process Improvement: Process Improvement can lead to better quality and higher profits. For many healthcare organizations, their processes are streamlined except for one or two areas. These areas are often related to tasks that are done infrequently or are done with outdated equipment or technology. BHN provides its clients with process improvement by implementing our established best practices for urodynamics and rectal manometry and by leveraging our unique software tools that drive the processes we use.
- Apply more focus on strategic activities: Focus in business is often overlooked and ignored. The book Focus: The Future of Your Company Depends on It by Al Reis addresses focus specifically, and it is applicable to all medical practices. Al Reis explains that a major problem in most business today is a lack of focus on a few key things that make a business (or medical practice) unique. It is common to see very good physicians asking each of their nurses to be a “jack of all trades”. Most nurses can do this, but when they do this they become less and less efficient. They become less efficient because of multi-tasking costs (it takes time to switch from one task to another) and because they don’t get to benefit from a meaningful learning curve caused by doing specific tasks hundreds/thousands of times. Outsourcing is a great way to focus on your core competencies, focus your staff, and let vendors help in those areas that are less significant.
- Access External Skill: Access to external skill is particularly true for smaller medical practices. It is not realistic for smaller medical practices to have broad service offerings, but small medical practices can improve patient care by outsourcing skills and services from specialized service providers. In our company’s case, we assist many smaller urologists, ObGyn’s, and gastroenterologists in the interpretation of urodynamics and anorectal manometry tests. Many of these practices would not be able to reliably interpret these diagnostics without us, which would reduce patient care quality and limit what they can provide to patients.
- Avoid Capital Investments: In recent years, avoiding capital investments has been a key reason for outsourcing. With frequent mergers and acquisitions (i.e. big healthcare organizations buying out smaller private practices) to better deal with the regulatory environment, capital investments tend to be a casualty. No practice owner or administrator wants to buy a major piece of expensive equipment if there is even a small possibility they will sell to a company or acquired a practice that already has that equipment. Furthermore, many practices have realized that it does not make financial sense to buy expensive equipment when the utilization rates are not known. Said differently, a great rate of return cited by a medical equipment sales rep can turn into a lousy rate of return if one uses the equipment at half the planned rate. Outsourcing can certainly address many capital investment issues. In today’s world, “pay per use” arrangements are much less risky and more financially viable than buying really expensive equipment.
Along with strong reasons to outsource, there are other reasons often quoted for not outsourcing. A few of the tops ones are listed below.
Biggest Reasons to NOT Outsource:
- Lack of Understanding: Lack of knowledge can manifest itself into a “not outsourcing” decision in two primary ways. First, medical practices, especially smaller medical practices, do not know they can outsource a given process, test, diagnostic, etc… For example, many of the smaller practices we are introduced to often say “I had no idea your company existed and certainly didn’t think I could outsource something as complicated as urodynamics and/or rectal manometry”. Second, the decision not to outsource is often reached by the lack of understanding related to financial modeling. We often see medical practices (both big and small) create overly simplified financial models to evaluate an outsourcing decision that leave out many variables crucial to the decision. For example, we recently witnessed a regional hospital base their financial model purely on nurse staff hourly costs, leaving out capital expenditures and overhead which were significant.
- Quality Control: No matter which vendor you hire for a given job, you are still responsible for the quality of their work. It is often more difficult to control quality when a job isn’t being done by your staff. In some cases, it’s even more time-consuming to check the work of an outside vendor than it is to have an employee handle the tasks in-house. If sub-par work reaches clients or customers, it’s your reputation that suffers. BHN addresses this issue by performing our diagnostics at our client’s facility and allowing them to inspect our work at any time they choose. This level of transparency increases quality. Additionally, we produce, with the aid of our proprietary software, ample documentation on each and every test to show that everything was done according to the proper standards.
- Confidentiality: In the medical industry patient confidentiality is paramount, so every organization big or small has to abide by HIPAA and set high standards for confidentiality, and any outsourced work must meet the same standards. For example, if a your urology practice hires an outside firm to bill clients, you must ensure that vendor’s employees will not release patient names or personal information under any circumstances. While a non-disclosure agreement can help give more certainty that the information will be safe, you would need to understand how the vendor’s employees are trained and monitored and what type of security protocols they are using for their information technology. Your vendor must have a sound IT security strategy. Some firms may not be used to meeting such a standard. At BHN, we regularly conduct HIPAA compliance audits using outsourced 3rd parties, and we perform numerous IT security audits to ensure each client’s data is secure.
- Liability: Not only can outsourcing affect your operations and reputation, it can impact you legally. If an outside provider makes errors or produces work that harms your patients, you may be held legally liable. BHN limits each client’s liability by performing our studies at each client’s facilities, by carrying ample liability insurance, and by indemnifying our clients contractually were applicable. BHN also uses highly skilled and trained nurses combined with strict protocols to limit potential liability.
- Flexibility: Companies must be flexible enough to adapt to a business environment in constant flux, so their outsourced functions have to respond quickly to changing demands. In the medical industry, flexibility often relates to accommodating patients schedules and extremely busy physician schedules. For most of BHN’s clients, achieving the required flexibility is no problem. We are able to provide testing schedules that meet both patients and physician’s needs. However, this is one area that can be challenging for certain medical practices due to a combination of location and logistics. BHN works with clients to constantly change and optimize testing schedules so both patients and physicians are satisfied.
Outsourcing Medical Diagnostics Summary
In summary, the healthcare industry around the world, and especially 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, such as specialty diagnostics, 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. BHN is forging a path in the area of outsourced diagnostics. Medical practices across the United States are seeing the value in BHN’s delivery model, and we are looking forward to helping many of them achieve higher levels of success and patient satisfaction. By outsourcing to BHN, our clients can provide state of the art urodynamic and anorectal manometry services to their patients without having to master the procedures or technology.