Outsourcing firms have taken note of hospitals' reluctance to use contractors and have tried to build offerings that pair local talent with outside experts.
Radisphere, a Beachwood, Ohio-based radiology outsourcing firm, says its niche is having local radiologists work alongside a network of offsite subspecialists who can offer around-the-clock consultations. Dr. Frank Seidelmann, the company's chief medical officer, notes that radiology has become increasingly subspecialized, posing a challenge to smaller hospitals.
“Hospitals are looking for the full array of subspecialty care,” he says. “Our people are onsite, we're local, but being supported by a model that has national expertise.”
Hank Schlissberg, the company's chief strategy and business development officer, notes that about 98% of hospitals outsource radiology services—significantly more than any other field—but most rely only on local practice groups.
Outsourcing firms in Modern Healthcare's survey reported a 12% decline in the number of contracts they had last year for radiology services, the largest among medical specialties. Observers say reimbursement concerns as well as acquisitions and consolidation in the industry often drive growth or contraction of services in each specialty.
Yet Charlie Rhoades, assistant administrator of general services at El Centro (Calif.) Regional Medical Center, notes that by using an outside radiology firm, scans that used to take up to 24 hours to read can now be done in an average of 25 minutes. “One of the big benefits that we've seen for our system is turnaround time,” he says.
The 165-bed hospital also works with a number of other medical services companies including TeamHealth for emergency medicine staffing, Quantum for hospitalists and Specialists on Call for neurology telemedicine.
Medical services as a whole represented the second-largest category for outsourcing expenditures, following closely behind construction. The 75 hospitals and systems included in the analysis spent a total of $456.8 million to hire companies that provide medical staffing services and other clinical functions.
Yet providers differed in which medical services they outsourced. Contractors that provide medical services reported in Modern Healthcare's survey that requests for nursing staff saw the largest fall-off, with a 22% decline in hospital clients using that service.
Psychiatric services similarly saw a decline of 4.3%, but contracts for anesthesiology and emergency department services increased 21.4% and 10.1%, respectively, among the outsourcing firms that responded to the survey.
EmCare, Dallas, which provides outsourced physician management services in five specialties and witnessed a 16.1% increase in healthcare clients between 2010 and 2011, reports that it has seen the greatest amount of growth in its integrated service lines, such as staffing hospitals with both emergency medical specialists and hospitalists.
“Traditionally there's been a bit of friction between those service lines,” says Todd Zimmerman, EmCare's president. “What it allows us to do is provide more coordinated care.”
Its services, he notes, can improve patient flow and reduce the number of emergency room patients who leave without treatment—both of which can have an impact on revenue as well as patient satisfaction in an age of value-based purchasing and patient-centered medicine.
“The focus on the patient experience is heightened right now,” Zimmerman says.
According to the survey, food service contractors saw the largest percentage increase, 55%, in the number of facilities served. Healthcare providers included in the supplemental data spent a total of $52 million in 2009 on food service contractors, making it the eighth-largest category for expenditures.
“The demand for the services has always been strong,” says Theodore Wahl, president and chief operating officer at Healthcare Services Group, Bensalem, Pa., which specializes in housekeeping, laundry, environmental services, and dining and nutrition.
The publicly traded company grew its healthcare client list 26.8% between 2010 and 2011 to 3,733, according to the survey. Its food services business grew 62%. It also reported in an earnings release that revenue increased 15% to $889 million and net income increased 11% to $38 million.
Wahl attributes the growth to a maturing middle management team that has been able to take on new clients.
Yet he notes that cost pressures have created new opportunities for all outsourcing firms—adding that his company has a diverse list of clients that range from large national chains to small independent hospitals.