Hospitals Often Outsource Important Services to Companies That Focus on Profit Over Patients | Kiowa County Press

Many hospitals subcontract their services to specialized companies. JazzIRT / E + via Getty Images

Leonard L. Berry, Texas A&M University and Paul Barach, Thomas Jefferson University

Hospitals have long adopted the practice of contracting out certain services to specialized companies. Much of this outsourcing involves non-clinical tasks such as laundry, IT, and cybersecurity, and outsourcing these types of services can improve efficiency and quality.

However, in recent years there has been a growing trend for hospitals to outsource clinically relevant services – like anesthesiology and emergency medicine – to companies separate from the hospital. When this happens, hospitals give up some of the control they have over the quality of care.

One of us is a researcher who studies the quality of services within health systems and the other is a practicing physician, researcher and advisor to medical centers who has direct experience in outsourcing. Together with collaborators, we analyzed published research to better understand the benefits and risks of healthcare outsourcing.

Our research focused on four clinically relevant services – emergency care, radiology, laboratory services, and environmental services – and we found tangible harm to patients and hospitals when these were outsourced.

A sign in front of a hospital giving directions for entering emergency rooms.
Emergency rooms are often staffed with people who do not work directly for the hospital. Raysohno / WikimediaCommons

Emergency care

When you walk into an emergency room in the United States, the doctor assisting you may not be working for the hospital you are in. Two-thirds of US emergency services use some kind of outsourcing, and more than half of emergency physicians practicing a hospital but for separate companies called contract management groups.

Some of these management groups are owned by private equity firms. The private equity healthcare model is to buy private medical practices and consolidate them into a larger business that provides outsourced services, quickly increases the value of the business, and then sells the business for a handsome profit. .

Contract management groups claim to streamline the recruitment and accreditation of emergency department personnel to relieve hospitals of these tasks and, hopefully, reduce costs. But the elephant in the room of emergency medicine and other medical specialties is that a goal of maximizing profits can conflict with the priority given to the well-being of patients and medical staff.

In emergency care, for example, these contract groups often have aggressive patient-per-hour quotas and prompt medical staff to order more procedures and tests – even if they are not justified. In one study, more than a third of emergency physicians employed by these groups said they feared losing their jobs if they raised questions about over-testing, the quality of care, or the treatment of patients – about twice as much. the rate of physicians employed by hospitals.

Contract management groups also contributed to surprise billing and excessive collections. For example, in the first six months of 2019, TeamHealth, one of the largest such groups in the United States that outsources emergency physicians, filed more lawsuits for unpaid bills against patients in Memphis, Tennessee, that three local hospitals combined. It was just negative publicity that caused the company to back down and stop suing patients.

An x-ray image showing a fractured elbow.
Interpretation of medical imaging is often contracted out to offsite companies. James Heilman, MD / WikimediaCommons, CC BY-SA


When you go for an MRI or X-ray, having the results interpreted by a radiologist is often the most expensive and time-consuming part of the process. The ability to speed up interpretation of results and reduce costs has led many hospitals to contract with separate and offsite radiology departments.

The practice is widespread: around 50% of radiologists report interpreting imaging results away from where the images were taken and a quarter say offsite interpretation constitutes the majority of their work.

For smaller, rural health care systems that lack the resources to recruit in-house radiologists, outsourcing can be essential. But for large healthcare systems, outsourcing can sometimes lead to negative clinical and business consequences that outweigh the benefits.

For example, offsite radiologists often do not have access to patient imaging records or medical histories. If these radiologists cannot see how a person’s condition has changed over time, it is more difficult to make an accurate diagnosis. This can lead to unnecessary and costly additional testing. Additionally, offsite radiologists may have more difficulty communicating with the physician who ordered the test, potentially reducing the quality and continuity of care.

Finally, there have been numerous reports of for-profit radiology companies using radiology technicians who are not physicians for certain services. Radiology technicians are cheaper to hire than radiologists but also less well trained. A radiologist or licensed physician is required by law to review and sign each report. But in one notorious example, a radiologist who owned a for-profit practice serving 15 US hospitals signed more than 71,000 radiology reports in an eight-month period. The company has been sued by the US government after investigators found licensed radiologists reviewed less than 6,000 – about 8% – of those reports.

Small glass vials placed in a blue vial holder.
When hospitals outsource lab tests, they can face increased costs and lower quality tests. Greg Emmerich / Flickr, CC BY-SA

Laboratory services

Another commonly contracted service is blood and other lab tests. On its own, Quest Diagnostics provides some level of laboratory service to about half of all US hospitals.

While the potential financial savings associated with using an offsite lab can be appealing to many hospitals, they are often faced with unforeseen and significant cost increases caused by higher test prices, excessive testing and costly management fees. In one study, two academic medical centers that stopped outsourcing lab tests and brought them back in-house said they saved between $ 1 million and $ 4 million in the first year. There is also some evidence that outsourcing can lead to slower test turnaround times and non-reproducible test results.

A man in personal protective equipment cleans the floor of a hospital.
Outsourcing of environmental services personnel who clean healthcare facilities has been associated with higher rates of dangerous infections. Neil Hall / Pool via AP

Environmental services

Environmental services, formerly known as ‘hospital housekeeping’, are a long underestimated but essential part of infection control in healthcare – even more so in the era of COVID-19. More than a third of US hospitals contract out environmental services, but these outside companies often don’t give workers enough time to clean patient rooms, and they tend to pay lower wages than in-house employers.

In a study of around 300 California hospitals, those that outsource environmental services reported nearly double the rate of Clostridioides difficile highly contagious bacterial infections that are easily spread in hospitals. The hard-to-treat staph infections known as MRSA are also more common in hospitals that have outsourced their environmental services.

Outsource intelligently

Health care is a unique service that must balance the quality of care and people’s very lives with economic realities and profit motives. However, when profit becomes a singularly dominant goal, the best interests of patients, hospital staff and the hospital itself are compromised. Maximizing profits does not align well with improving the safety and overall quality of patient care.

Many hospitals are also for-profit businesses, but unlike contract management groups, hospitals are more visible and financially accountable to the public. Outsourcing has a beneficial role to play in healthcare when it is used for the right reasons and with the right partners and the right guidelines. But when healthcare systems outsource clinically important services to outside companies, there is a real risk that it could lead to patient harm, disgruntled staff and higher costs. We believe that outsourcing should only be used when it is the best option for all stakeholders, starting with patients and staff.

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The conversation

Leonard L. Berry, Emeritus Professor of Marketing, Mays Business School; Principal Investigator, Institute for Healthcare Improvement, Texas A&M University and Paul Barach, lecturer, senior advisor at Dean College of Population Health, Thomas Jefferson University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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