Created with love and coffee by Carlos Posadas

The Astonishing Rise of Hospital Outsourcing

Carlos Posadas

Business Development Executive at Atento

Published May 18, 2023

Across various sectors, the practice of business process outsourcing (BPO) has emerged as a valuable option for companies aiming to enhance efficiency while minimizing costs. Within the healthcare industry, BPO solutions have played a crucial role in enabling hospitals to deliver exceptional patient experiences while effectively managing non-clinical tasks. In recent years, the convergence of global health crises and technological advancements has significantly amplified the demand for efficient healthcare services, leading healthcare facilities and hospitals to increasingly outsource both clinical and non-clinical functions. This article provides insights into the world of hospital outsourcing, exploring the factors propelling its rapid expansion.

Exploring the Practice of Hospital Outsourcing

Hospitals are increasingly turning to medical business process outsourcing (BPO) services to enhance their healthcare offerings while simultaneously reducing operational expenses. By partnering with third-party service providers, hospitals can delegate their back-office functions, allowing them to prioritize the delivery of high-quality patient care.

Typically, hospital outsourcing vendors establish long-term contracts with fixed monthly fees, although some offer flexible pay-as-you-go arrangements where clients only pay for completed services as needed. These BPO contractors typically handle various non-core tasks, including:

Data entry: Entering data into word processing software to facilitate categorization, storage, management, and analysis.
Medical billing: Organizing medical costs and insurance claims, generating invoices, and managing payment collection.
Claims processing: Evaluating and verifying requests for medical claims.
Medical coding: Converting patient records into universal numeric and alphanumeric codes to ensure accuracy and prevent errors.
Medical transcription: Transcribing voice recordings of medical professionals regarding patient symptoms, diagnoses, and laboratory test results.

Understanding the Drivers of Hospital BPO Growth

Since the onset of the pandemic, hospital outsourcing has become increasingly prevalent, driven by ongoing technological advancements. As a result, the global hospital outsourcing market reached a value of $281.4 billion in 2021, according to The Business Research Company.

The demand for BPO services is expected to fuel further market growth, with projections estimating the market to reach approximately $326 billion in 2022 and nearly $527 billion by 2026. During this forecast period, the market is anticipated to register a compound annual growth rate (CAGR) between 12.8% and 15.8%.

Several factors contribute to the continued expansion of the industry.

Streamlining Back-office Functions

Creating a dedicated in-house back-office team requires significant resources, including funding, time, and effort. Healthcare providers need to invest in hiring and training skilled personnel, acquiring advanced technologies, and providing suitable work environments.

While assigning non-core tasks to the same team handling core initiatives can save costs, it may impact overall productivity and output. When administrative tasks overshadow core responsibilities, growth can be delayed, and employee burnout may occur.

To address these challenges, many healthcare organizations are turning to outsourcing services for managing back-office processes such as IT and medical billing. Third-party employees undergo regular training and certification to efficiently handle administrative work. Medical providers trust these specialized workers to deliver high-quality outcomes. This allows in-house teams to concentrate on crucial projects and provide exceptional patient care.

The adoption of business process outsourcing (BPO) by healthcare organizations is increasing, as it brings improved productivity and efficiency. As more organizations recognize and implement this practice, the outsourcing market continues to grow.

Cost Savings

The primary driver behind the growing trend of outsourcing hospital functions is the desire to reduce operating costs. Establishing an in-house team to oversee back-office tasks requires significant financial investment but does not guarantee a positive return. Although these non-core processes do not generate direct revenue, they play a crucial role in ensuring the ongoing functioning and profitability of hospitals.

Engaging healthcare BPO services eliminates the need to recruit and train additional full-time employees, especially during busy periods like peak seasons or holidays. Third-party service providers already have a skilled workforce capable of efficiently handling administrative work.

Contractors leverage advanced software and infrastructure to expedite time-consuming activities. They have also implemented flexible work arrangements, such as remote or hybrid setups, eliminating the need for hospitals to allocate extra office space to accommodate contractors.

Furthermore, medical providers have the option to pay their BPO partners through monthly billing contracts or on an as-needed basis. These payment terms cover comprehensive service packages, eliminating the need for separate expenditures on labor, infrastructure, and real estate costs.

Dealing with Workforce Shortages

Despite efforts to promote flexible work arrangements and embrace advanced technology, the global health crisis has created significant workforce shortages on a global scale. As hospitalizations rise, healthcare professionals are leaving the industry due to excessive workloads and burnout.

These changes also impact the back-office operations. In-house administrative teams are overwhelmed by the mounting workload and backlogs, particularly in processing medical bills and claims, as well as ensuring the organization and security of medical records.

The lack of proper compensation and work-life balance has led some employees to seek opportunities elsewhere, resulting in an overburdened workforce. This situation not only affects productivity but also compromises the quality of healthcare services.

To address these shortages, medical providers are turning to outsourcing hospital processes. By partnering with BPO companies that have a skilled workforce ready to be deployed upon contract signing, hospitals can effectively scale their workforce to meet recurring needs without incurring additional expenses. The benefits of increased cost savings and enhanced productivity further entice medical providers to embrace BPO, thus driving the expansion of the hospital outsourcing market.

Maintaining Electronic Health Records (EHR) Systems

EHR systems store digital patient records, encompassing lab results, diagnoses, prescriptions, treatments, and personally identifiable information. These systems automate data access, storage, and management, accelerating clinicians' tasks and enhancing patient care by:

Improving the accuracy and clarity of medical records
Reducing medical errors
Providing evidence-based tools for healthcare improvement strategies
Implementing rigorous data security and privacy protocols

Managing the extensive data involved in EHR systems can be overwhelming for in-house staff. To address this, medical providers opt for full subscription packages that include after-sales support from third-party software vendors. Outsourced EHR support ensures the protection of patient data throughout the delivery of healthcare services.

With the growing prominence of remote monitoring technology, more hospitals are turning to the healthcare BPO industry for EHR software and support. Even as the pandemic subsides in some regions, the demand for outsourced EHR solutions continues to expand. Many hospitals continue to embrace remote monitoring to offer flexibility for patients and doctors alike.

Expanding Telehealth Support

In addition to remote monitoring, telehealth has become the prevailing norm, enabling patients to connect with their healthcare providers through their preferred communication channels.

However, operating and maintaining telemedicine platforms require hospitals to allocate substantial upfront capital. Delivering fast and effective telehealth services also necessitates additional staff and modern solutions, leading to increased expenses.

To address these challenges, medical providers enlist the services of BPO companies to ensure seamless telehealth support. Alongside electronic health records (EHR), third-party service vendors leverage artificial intelligence (AI), automation, and an omnichannel platform. These advanced solutions enable their staff to promptly assist patients seeking telehealth services.

By leveraging these capabilities, hospitals can deliver personalized patient care. Contractors utilize a contact center platform that integrates various communication channels, such as video calls and live chat. The implementation of omnichannel support facilitates easy and convenient connections between patients and healthcare professionals.

The Bottom Line

The outsourcing of hospital functions is influenced by global health issues and the ongoing digital transformation. Healthcare providers opt for healthcare BPO services to alleviate the burden of back-office functions and reduce operational costs. The need to address workforce shortages, maintain EHR systems, and expand telehealth support further contributes to the growth of the market.

As a result of these advantages, hospitals continue to collaborate with BPO companies like Atento. By entrusting back-office tasks to external teams, healthcare organizations can dedicate more time to enhancing their core products and services. This approach allows them to prioritize the improvement of patient care while ensuring a well-organized workflow.