Ten things to consider before outsourcing your healthcare needs. 

I have spent a good part of the past 10 years in the healthcare industry, immersing myself in the workings of foreign countries as it relates to coding, billing, compliance, HIPAA, Protected Health Information (PHI), etc., and have found that there are many issues to consider before taking the leap (as so many practices have done) to outsourcing one’s financial future to a different country.

The idiosyncrasies of working in different countries are numerous, compared to the checks and balances that are required of U.S.-based companies. As such, I am frequently asked about outsourcing healthcare-related services to overseas operations — the pros and cons, but sometimes just about the reality of these types of engagements.

In this article I will discuss what I have found to be the typical reality of working with overseas companies, known as “offshoring,” and identify 10 issues to consider before you relinquish control over your operations, and your patient’s protected health information, to an overseas company.

  1. HIPAA —One of the top issues of concern for healthcare organizations considering whether to outsource a service(s) to a foreign operation is the protection of personal health information (PHI). It is imperative to make sure a HIPAA risk assessment of the operation is completed and proper security measures are in place to protect PHI. Ask for the operation’s risk assessment plan and a description of its security measures. Security measures should include such items as utilization of “dumb terminals” (terminals without a hard drive for storage), lockers for employees to store cell phones and other devices capable of taking pictures, security cameras, and limited printers in locked offices to help prevent the printing of information containing PHI. Furthermore, ask this: what laws are enforceable applying to a U.S.-based physician’s practice, or to a foreign-based billing company if it is not U.S.-owned?
  2. Service, service, service — Many colleagues have experienced a great deal of frustration when trying to interface with a knowledgeable client representative, whether here in the U.S. or abroad. I have worked with several overseas companies, and the lack of responsiveness, client service, and the ability to get the right people can definitely be frustrating. You will need to work to address this issue with your overseas partner prior to it even becoming an issue. Include contractual language that identifies your service person and the process that is in place, in the event that this person leaves the organization, and expected levels of service, to include access to that person(s).

A common strategy used by overseas companies is to outsource their work to other companies. It makes sense. Workloads can sometimes become more than expected, and affordable and capable labor can often be found at smaller companies. Relationships between larger and smaller companies are forged for the sake of mutual benefits. Ensure that your contractual language states that you will be notified before any of your workload is subbed out. An annual audit (see item No. 8) of overseas operations during the year may help uncover any unauthorized outsourcing of your work to other companies.

In healthcare, I personally support coding being performed here in the U.S., working with a large contingency of U.S.-based coders, and striving to find capable American workers at various institutions. The CPT Book is only available in the English language, and the payors do not allow claims to be submitted in any language other than English. So it is reasonable to ask your offshore company: do you know U.S.-based CPT coding? ICD-10-CM is on the world forum, but it does have English-language preference. The ability to complement and augment staff when necessary can be a tremendous advantage.

  1. Language and culture— I frequently hear about frustration experienced when trying to understand someone from another country. Although people from various countries speak English, their command of the language and accents will vary. Patience is a virtue that is important for a successful relationship to evolve. This is true of all relationships, including those you work to establish with individuals from other parts of your community, state, country, and world. However, if your patients are expected to interact with a staff member from a foreign country and your patient population includes a high percentage of Medicare, the level of frustration from patients will be the same as if they were trying to call a bank or airline after hours and were routed to an operator overseas.

This is not to say that there aren’t very capable people within all organizations with a great desire to achieve goals and objectives established. But my feedback from clients is that they will sometimes tell me they get frustrated because individuals from some particular country always give an affirmative answer when asked if a function can be performed. Such representatives are likely not trying to deceive the client; rather, it is the individual’s culture to always want to please the client and do what’s right. In these scenarios, an affirmative answer needs to be followed up with further discussion to help ensure that the representative’s company is in fact capable of performing the task, and in the manner you require.

  1. Turnover— It is important to recognize that turnover of staff is a constant issue faced by most companies, including overseas operations. People will move due to greater compensation, a better position, location, and improved hours — sometimes with little or no notice. It is not unusual to have a turnover rate of between 30-50 percent at some overseas companies.

Ensure that the team members you will work with are trained, that there is appropriate supervisory staff in place, and that the company uses audit processes to measure and monitor staff performance. If you find the team that was originally working on your account to be completely turned over, with new people being trained as they go, speak up and request that the team be comprised of a mix of trainees and experienced workers.

  1. Quality control — Make sure there is a clear understanding of performance expectations, as you would have with any outsourced company (national or international) and internal operations. Overseas operations should have daily, weekly, monthly, and quarterly reports. These reports should reflect performance, productivity, and operational assessments. These performance indicators measured should be very specific and agreed upon by both parties. They may include measures encompassing productivity, efficiency, and outcomes.

When outsourcing work to a third-party vendor, organizations will no longer have the same control they had over their own employees. Vendor employees may be unqualified or improperly trained, and this can lead to quality control issues. Organizations should consider initiating measures to ensure a standard of quality, especially if the outsourced workers interact with the public. Organizations may want to set up a training program for vendor employees and establish evaluation criteria. They also may want to have one of their employees travel to the country to evaluate the vendor.  

  1. Policies and procedures —Any overseas operation to which you outsource should have policies and procedures in place so you know how functions are managed, discrepancies handled and documented, reports disseminated, and communications managed between headquarters and outsourced offices. You will want to have a good understanding of how these processes work in a secure manner. You do not want to leave anything to chance. If you do not keep an eye on policies, procedures, and performance, you may find that a small problem can become much larger before it is identified.
  2. Location, location, location —There are variables to weigh when considering outsourcing to overseas operations. Access to electricity is a very real concern. Ensure there are backup generators available and that they are tested regularly. Depending on the country and even the part of the country, electricity could be a major issue. As overseas operations grow, companies will sometimes expand or move operations to “secondary” cities where there is a cheaper workforce and lower overhead. When this occurs, access to the Internet and phone lines may be compromised, as might access to reliable power sources. Ensure that your contract indicates the location of the offices and notification of the relocation of any workforce. Annual audits may also uncover undisclosed utilization of secondary cities.
  3. Auditing and compliance —When reviewing contractual language, make sure there are policies in place for audits accompanied with a strong compliance plan. I personally prefer the hybrid approach, whereby select functions are performed overseas while others are performed here in the U.S., both with appropriate oversight. I also believe that the expense of having an independent healthcare attorney or certified auditor in the U.S. to oversee the compliance program and perform audits is a worthwhile investment.
  4. Costs– Yes, the cost associated with outsourcing a function to an overseas operation can be very appealing. For example, a charge entry person overseas may have an annual salary of approximately $20,000 or less, while the same person working in the U.S. may make over $40,000, not including benefits and the cost of management oversight.

While the upfront savings of outsourcing can seem substantial, there is a hidden cost that is often overlooked. Working with overseas operations still requires management of the operations. You need people who will oversee all functions performed abroad. Also, the errors that have been reported by practices using offshore companies to provide billing, coding, and reimbursement services have increased exponentially over the years.

  1. Perception — Outsourcing is not going away, despite the negative perception that is sometimes associated with it (some of which is justified). There is logic behind the performance of functions that does not compromise quality via a more affordable solution. It is up to you to decide which functions you feel comfortable outsourcing.

In general, hospitals are moving more slowly than health insurers to send jobs overseas. But with financial pressures intensifying and the uptake of electronic record-keeping accelerating, analysts and industry people see more consolidation and outsourcing ahead.

In a recent Los Angeles Times article, Steve Trossmann, a Los Angeles spokesman for the Service Employees International Union, which represents hospital workers, was quoted  “When you have people’s medical, billing and other records kept electronically, then it opens it up to establishing a call center virtually anywhere, and there is no longer a reason for it to be physically in the same place as the paper or housed records.” I would have to agree.

The healthcare reform law could prod insurers to move more jobs to cheaper-wage countries. The new law requires companies to spend 80  to 85 percent of premiums on medical care, limiting the amount available for administrative expenses. So again, outsourcing is not going away, and offshoring is becoming more and more prevalent in the healthcare industry. Be prepared.


Program Note:

Listen to Terry Fletcher report on this topic today on Talk Ten Tuesdays, 10 a.m. EST.

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Terry Fletcher, BS, CPC, CCC, CEMC, CCS, CCS-P, CMC, CMSCS, CMCS, ACS-CA, SCP-CA, QMGC, QMCRC, is a healthcare coding consultant, educator, and auditor with more than 30 years of experience. Terry is a past member of the national advisory board for AAPC, past chair of the AAPCCA, and an AAPC national and regional conference educator. Terry is the author of several coding and reimbursement publications, as well as a practice auditor for multiple specialty practices around the country. Her coding and reimbursement specialties include cardiology, peripheral cardiology, gastroenterology, E&M auditing, orthopedics, general surgery, neurology, interventional radiology, and telehealth/telemedicine. Terry is a member of the ICD10monitor editorial board and a popular panelist on Talk Ten Tuesdays.

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