Health systems are increasingly adopting outsourcing as a strategic approach to address operational inefficiencies and financial challenges. This trend is exemplified by recent initiatives undertaken by various systems aimed at delegating revenue cycle and IT responsibilities to external partners. The goal is to enhance agility, reduce costs, and shift the organization’s focus towards delivering optimal patient care.
Adventist Health, based in Roseville, Calif., recently implemented a comprehensive restructuring plan affecting approximately 750 employees, with a significant focus on outsourcing various business functions. This 27-hospital system is outsourcing operations such as finance, human resources, talent acquisition, supply chain IT, and accounts payable, while maintaining oversight responsibilities. The restructuring is part of broader financial sustainability efforts driven by factors like Medicaid cuts, policy changes, and rising labor and supply costs, with the ultimate aim of reallocating resources towards direct patient care.
Allina Health, headquartered in Minneapolis, has also embraced outsourcing through a partnership with Optum, a subsidiary of UnitedHealth Group. In a significant move, around 2,000 Allina information systems and revenue cycle management employees transitioned to Optum, leveraging its technology and resources to enhance IT and revenue cycle operations, streamline billing processes, and drive innovation adoption. This strategic alignment with Optum is part of Allina’s overall financial and operational strategy, following a remarkable turnaround that saw a substantial improvement in operating margins.
Providence-based Care New England demonstrated another example of successful IT outsourcing by transferring nearly 160 IT staff members to Kyndryl, an IBM spinoff. This transition enhanced the system’s agility, efficiency, service quality, and governance. Care New England established an executive group to oversee the vendor’s performance and deliverables, leading to improved decision-making and execution of strategic initiatives, particularly during transformative efforts like Epic implementation and digital transitions.
Several health systems have also ventured into revenue cycle partnerships to manage end-to-end revenue cycle operations effectively. Methodist Le Bonheur Healthcare in Memphis engaged Ensemble Health Partners, while Firelands Health in Sandusky, Ohio, and Jackson Parish Hospital in Jonesboro, Louisiana, partnered with TruBridge and Ensemble, respectively, to support revenue cycle functions. These collaborations highlight the growing trend among health systems to leverage outsourcing not only for cost reduction but also to enhance long-term agility and sustainability.
Key Takeaways:
1. Health systems are increasingly turning to outsourcing to address operational inefficiencies and financial challenges, with a focus on optimizing patient care delivery.
2. Strategic partnerships with external vendors for revenue cycle and IT functions are helping health systems cut costs, streamline operations, and drive innovation adoption.
3. Outsourcing initiatives have shown promising results in enhancing agility, efficiency, service quality, and governance within health systems.
4. Collaborations for revenue cycle management are becoming common among health systems to ensure effective end-to-end operations and financial sustainability.
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