When an automobile rolls off the assembly line, it carries the name Ford, Toyota or whichever company is selling it. But the company that assembled the car doesn't build all of its parts.
Assigning such work outside the company is called outsourcing. Automakers use outsourcing because they figure they can get less expensive, better-quality parts from a company that focuses on building a particular component.
Outsourcing is a word that's becoming more common to physician practices as well. Companies that focus on handling billing services, payer contracts or other healthcare administrative services say business is booming as doctors have become more dissatisfied with the idea of selling their practices to physician practice management companies or hospitals.
Jeff Greene, president of Oklahoma City-based CompOne Services, says his company had more sales growth in the past year than it did for the previous five years combined. CompOne focuses on providing services to office-based physicians; it has a client base of 700 to 1,000 physicians, and revenues could stretch into eight figures this year.
Outsourcing companies typically have shorter-term and more incentive-based contracts with physicians than PPMs do. For example, a company may get a percentage of bill collections or a percentage of profits.
The main advantage of outsourcing, Greene says, is that it has none of the constraints common to the agreements physicians make with PPMs; it allows doctors to keep control of their practices.
CompOne is the largest among a very few companies that are focusing on outsourcing for office-based physicians. However, more are likely to pop up soon because there are still plenty of physicians in need of such services. According to a survey released in last December by the National CPA Healthcare Advisers Association, 72% of physician practices didn't outsource at all.
A clear sign that the industry sees a future for outsourcing was the purchase of a majority stake in CompOne in 1997 by IPN Network of Nashville, which handles such services for hospitals.
IPN representatives say its push into physician outsourcing is related to its plan to develop a single bill to cover all of a patient's healthcare services, much like a credit card statement combines all purchases made with the card.
Another sign that the market for outsourcing is growing is technology giant Medic Computer Systems' decision to look at getting into the business. Medic, a Raleigh, N.C.-based division of British firm Misys PLC, which sells computer systems, is considering offering billing services and contract negotiations when its customer base reaches 100,000 doctors, says Kenneth Howard, Medic's vice president of sales. As of April, Medic had 60,000 physician clients.
"It's another alternative to joining a PPM," Howard says.
But don't get the idea that outsourcing companies are bashing PPMs. They would like to land them as clients, too. Irvine, Calif.-based Practice Builder Association has been helping some unidentified PPMs solve their organizational and marketing problems.
There's a growing realization industry-wide that few PPMs will be experts at every aspect of business, so they might need to outsource, too.
"Instead of a PPM handling billing in-house, they could contract with us," Howard says.