Press Releases  |  Event Calendar  |  Articles  |  Seminars

The Benefits of Strategic Outsourcing
By Ron Napiorski

Page   1   2   3   4  

(For The Garden State Focus)

The second hurdle is price. CFOs ask continuously: Am I paying too much? Pricing is a critical issue for both the client and the vendor, and it has to be a win-win for both parties. The CFO will always have to justify the overall decision to the CEO and the Board. Once justified, the expenditure may need on-going monthly justification. During this evaluation period, it is important to focus on three things:

1. The hospital must achieve its return on investment goals to justify making the monthly expenditure.
2. The valuation should consider both the cost as well as the opportunity to recover more cash on a timely basis than is otherwise possible.
3. From the vendor’s perspective, the price must produce a reasonable return to justify the continuous investments in systems enhancements, workflow process improvements, and staff training – the central ingredients for delivering the differentiated results for their clients.

The third issue to plague the CFO is likely to be the vexing question: Why can’t my billing staff do this? There are two answers to this:

1. The focus of the hospital billing department and their information systems is to process the final bill. The focus of the outsourcer and their information systems is on performing aggressive follow-up.
2. The outsourcer can provide additional staff resources not available in the hospital. The outsourcer and their staff become an extension of the hospital’s billing department. When the need declines, the outsourcer can reassign people without the negative human resource implications for the hospital.

A Way to Proceed

Although Mr. Popko and Mr. Shanahan found themselves in somewhat different circumstances, they agree on the key characteristics of a strong outsourcing partner. In their selection process, they looked at:

• Track record of results in hospital A/R management;
• Proven best practices;
• Flexible, state of the art systems;
• Reporting capabilities -- results, forecasts and findings of systemic (process) issues impacting cash flow;
• Experienced and well trained staff;
• Critical mass of resources to allow for rapid response to unexpected changes or requests; and
• Seasoned, credible management from within the hospital industry.

Their experiences also demonstrated that a successful outcome is driven by how the relationship is structured and managed. The following factors should also be present for success:

• Clearly defined scope and expectations, including financial goals, timeframe, quality and customer service expectations;
• Ability to adapt to client needs, rather than forcing adaptation to the vendor’s business model,
• Consistent delivery against plan;
• Routine reports which clearly communicate status and outcomes;
• Close and positive working relationships, including continuous communications and active client involvement; and
• Valuable advice based on the vendor’s broad perspective gained over many different clients.

Both Mr. Popko and Mr. Shanahan have come to value their long-term relationship with their outsourcer. They encourage their colleagues to see outsourcing as an important strategic tool.

Sidebar:

Value of Outsourcing Accounts Receivable

Examples of Typical Hospital A/R Outsourcing Results

• Full Outsourcing
  • 15% to 20% improvement in monthly cash
  • Over 50% decrease in bad debt
  • 35% and 45% decline in A/R over 150 days
  • 55% improvement in self-pay recovery rates over typical hospital experience
  
   
• Self-pay outsourcing only
  • Recovery of approximately 40% of gross receivables
  • In excess of 50% recovery of balances under $250

Other Benefits of A/R Outsourcing

• Access to comprehensive services – billing
  and A/R follow-up
• Extensive on-site expertise in healthcare A/R
• Solutions customized to fit specific needs
• Performance based accountability
• Self-funding results
• State-of-the art systems
• Automated processes and workflows
• Dedicated call center and centralized service bureau for calls and correspondence
  

Page   1   2   3   4   Back to White Papers

Copyright©2002 Creditek, LLC. All Rights Reserved.   |   Privacy Statement