Hospital costs should be cut 24 percent by 2022 to break even, outsourcing may help, survey says

Hospital leaders are exploring ways to outsource services to free up resources, and if the results of a new Black Book survey are any indication, this strategy will come none too soon.

In order to break even, average hospital costs will have to be reduced by 24 percent by 2022.

According to the survey, 98 percent of hospital leaders are determining whether to work with third-party vendors for cost efficiencies in both clinical and nonclinical functions, which would allow hospitals to focus on value-based programming.

Outsourcing technology, financial services and facilities management services have been long-established ways for hospitals to transfer day-to-day administration of non-core functions to outside vendors. But the drive to deliver value-based care at a high quality is pushing nine of 10 hospitals to consider outsourcing to provide clinical expertise as well.

"Hundreds of outsourcing firms are creating a niche by specifically focusing on healthcare clients only," said Doug Brown, president of Black Book Research. "Some leading vendors have recognized the need to bundle services that are only relevant to hospitals and inpatient groups such as IT, cybersecurity, clinical services, analytics and health facilities management."

The opportunities to reduce clinical costs in past decades was mainly limited to anesthesia and emergency medicine, but hospitals now have a cost structure that's unsustainable, according to Black Book. That's leading some hospitals to pump up the clinical side of things through outsourcing.

Two of the most popular areas that hospitals are currently vetting are in the diagnostic imaging service lines -- teleradiology and medical imaging equipment -- as many hospitals lack the capital funds necessary to invest in newer, more advanced imaging centers.

"Value-based care reforms have put pressure on hospitals to decrease inpatient volumes, achieve outcomes goals and provide cost-effective care," Brown said. "Clinical services outsourcing is the rage because it offers struggling hospitals with immediate alternatives."

Outsourcing in the healthcare sector tends not to get a bad rap, as it does in some other industries. The survey attributes this to a more developed understanding of how to handle vendors. A very small number of surveyed executives -- barely 2 percent of respondents -- consider outsourcing an unthinkable option due to the anticipated reaction both internally and externally, from staff, physicians and the community.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com