Outsourcing May Grow as Health System Evolves

Outsourcing, an established but fairly static practice in the U.S. health care industry, may grow in scope as the country experiences major shifts in health care delivery.

The health care industry is no stranger to outsourcing. Administrative work — billing, collections, enrollment, eligibility – as well as clinical work — radiology, laboratory tests, physical therapy — are often done by contractors outside the health system providing coverage and care. In some systems, insurers and hospitals routinely outsource specific kinds of specialized care, such as intensive pediatric care, neurosurgery and burn care.

With pressure mounting from several directions, health care systems may be looking outside more often and with a wider lens, according to some experts.

“I think it’s very likely we’ll see outsourcing grow,” said Joanne Spetz, professor at the Philip R. Lee institute for Health Policy Studies and Center for the Health Professions at UC-San Francisco.

“It will probably grow quickly, maybe even dramatically, in some areas like IT (information technology). But in other areas, especially the hands-on clinical parts of health care, it will be much slower,” Spetz predicted.

In other industries the word “outsourcing” often carries an offshore connotation, implying jobs formally done in this country are being sent elsewhere in the world. Until recently, that generally hasn’t been the case in health care. In the past few years, more health-care related work has been sent overseas. Workers in India, the Philippines, Ireland and other countries are working for U.S. health care companies.

WellPoint Embracing Outsourcing

WellPoint, one of the largest health insurers in the country and corporate parent of California’s largest for-profit health insurer — Anthem Blue Cross — has embraced the idea, listing a variety of benefits of outsourcing.

“WellPoint is among thousands of leading U.S. companies that utilize sourcing strategies to make our services more effective, accessible and affordable to our customers while significantly reducing our operating costs,” WellPoint officials said in a written statement to California Healthline.

Some of those outsourced jobs — mostly in administrative and information technology, but some in clinical oversight — have gone offshore.

Jill Becher, WellPoint spokesperson, stressed that “no decisions that involve denial of procedures or treatment for patients are made overseas.”

Nearly 1,000 WellPoint employees have either lost a job or hours to outsourcing in the past two years.

“We strive to limit the impact of staffing adjustments and sourcing strategies to what is absolutely necessary,” WellPoint’s statement said. “These adjustments have impacted less than 2.5% of the more than 37,000 people that WellPoint employs across the country. In situations where jobs are eliminated, associates have the opportunity to find new positions in the company.”

Three Shifting Areas Could Influence Outsourcing

Major changes in three main areas could influence how health insurers and health systems hire workers.

1. Information technology. The industry’s slow but inexorable march into the digital age has already sparked a flourishing industry of health IT outsourcing.
2. Reform. The Affordable Care Act, by increasing the number of people in the health care system and changing the way delivery is funded, may be a catalyst for new forms of outsourcing.
3. Cost-containment. Although the cost of health care is expected to continue rising initially as more people join the system, one of the main goals of reform is to get costs to level off or even go down. If going out-of-system can save money, outsourcing may grow.

“Probably the area that lends itself most immediately to outsourcing is IT,” said UCSF’s Spetz. “Whether it’s overseas or domestic, the need for IT expertise is clear and growing.”

“Hardware people — the people who actually install the machines — need to be here,” Spetz said. “But software people and customer support can be anywhere in the world. I’ve heard of software operations with a team of programmers in Ireland, here and India literally running a 24-hour cycle of writing code.”

‘Some Things You Just Can’t Outsource’

While some of the benefits of outsourcing are clear in technical and administrative functions, hands-on health care providers worry the trend could be carried too far.

Bonnie Castillo, legislative director for the California Nurses Association, said two areas in nursing have worrisome outsourcing potential.

“Nurse advice lines and telemedicine both are definitely ripe for that,” Castillo said. “Nursing is both art and science and you can’t transfer the benefits of that face-to-face contact with patients and families. You can’t do that through machines — phones or video.”

“There are some things you just can’t outsource,” Castillo said.