All–out Outsourcing

March 1, 2006

A Virginia community hospital uses outsourcing the way Fortune 100 companies do.

“Core competency” is a concept that has been around for decades. Every 10 or 15 years, its significance is re–evaluated by hundreds of diverse organizations including financial services, manufacturing, retail and, of course, healthcare.

A Virginia community hospital uses outsourcing the way Fortune 100 companies do.

“Core competency” is a concept that has been around for decades. Every 10 or 15 years, its significance is re–evaluated by hundreds of diverse organizations including financial services, manufacturing, retail and, of course, healthcare.

In Manassas, Va., Prince William Health System is a healthcare organization that takes core competencies seriously, right along with regulatory compliance, nurse recruiting and outsourcing. In fact, Prince William Hospital has outsourced its health information management (HIM) department, its business office and both its medical and diagnostics transcription functions, so that it can zero in on core competencies.

Chief Financial Officer Bob Riley, to whom the HIM department reports, is quick to say, “This decision in no way lets me off the hook. These functions are still on my plate, and I’m still responsible to deliver.” But the business philosophy behind the decision to outsource, he says, is one of getting the job done, not recruiting 12 months a year to find the talent and then trying to retain it. “If we need experts, let’s get experts in here. Getting it done is more important than how we go about it. Let’s get the job done, so we can focus on patient care.”

“Can We Keep Her?”
The job, according to Riley, emanated from the HIM department’s requirements, and involved a demonstrated need for performance improvement in clinical closure of patient records. For years, the 170–bed hospital, located in a Virginia suburb of Washington, D.C., had struggled to recruit and retain the talent it required; HIM was just one affected arena. All organizations that live in the suburban shadow of major metropolitan areas understand the challenge of professional recruitment. Prince William Hospital had a good handle on the difficulties that constituted its organizational challenge.

Delinquent records were the problem, or more specifically, achieving clinical completion and physician sign–off on patient charts so the records could move forward to the coding, billing, claims adjudication and reimbursement stages of the revenue cycle. According to Riley, the organization’s coding was accurate, billing was timely and even reimbursement income was on target. But delinquency at the level of clinical closure was a challenge with ricochet potential. Ultimately, when a healthcare organization is late to complete patient charts, that delinquency might pose a threat to Joint Commission compliance, and also might risk the satisfactory coding, billing and payment results already achieved.

At the time, the hospital’s clinicals weren’t automated. “But, medical leadership here wanted to get it right. Our vice president for quality services also wanted to get it right. In fact, that was the trigger point for me,” says Riley. “When two or three constituents approach me and say, ‘We want it to be better, but we’re not sure we can achieve better with our current processes,’ it’s time to act.” That trigger presented a virtual launching pad for Riley’s quiet transformation of “getting the experts in.”

He had previously worked with Precyse Solutions, a Wayne, Pa.–based provider of outsourcing services, at another facility. In February 2004, he invited Precyse in to evaluate the HIM department and make recommendations for performance gains. Terri Hughes, R.H.I.A., was the Precyse consultant, and Riley says she made a swift connection with the Prince William medical staff. “It wasn’t long before they were asking, ‘Can we keep her?'”

Keep her, they did. Hughes was named the interim director of HIM and worked in that capacity for eight or nine months. She focused on filling key vacancies, establishing appropriate training for HIM staff, building strong relationships with other hospital departments and boosting her department’s morale. In February 2005, Prince William elected to outsource its entire HIM department to Precyse. In effect, the 25 to 30 HIM employees at Prince William became Precyse employees, and Riley stresses that between 90 percent and 95 percent of those employees chose to continue in the new arrangement, with Hughes continuing to lead the charge as HIM director.

Changing Face of Outsourcing
Healthcare outsourcing used to be a choice targeted for Web site development or call center operations. Billing units, business offices, HIM departments and other mission—critical functions were–if not off limits—rarely mentioned in the equation.

But outsourcing has changed, evidenced by Business Week’s January 30 lead article, “The Future of Outsourcing,” and so has the world that embraces and depends on it. BW author Pete Engardio articulately makes the case: Just years ago, off–shoring was the disrespected little term for the practice of corporations that farmed gargantuan tasks overseas strictly to avail themselves of cheap labor and optimize shareholder return. Not any more.

The business philosophy behind the decision to outsource … is one of getting the job done, not recruiting 12 months a year to find the talent and then trying to retain it.

Today, wildly successful, multinational corporations such as Proctor & Gamble, Cisco, DuPont and Marriott incorporate outsourcing into their strategic growth plans from the start. It is, in fact, their ability to outsource predetermined functions and the availability of outsourcing resources that allows such companies to plan their future financial growth without a disproportionate rise in expenses, including additional jobs and the growth of facilities in the U.S. In the global marketplace, boards of directors wouldn’t have it otherwise.

It’s pretty much the same motivation for Riley, although he admits some healthcare CFOs would label his approach “radical.” To him, it is common sense. “We can spend so much time trying to find good business office managers or HIM department directors or coding supervisors, and that robs us from the time we can spend recruiting nurses and other clinicians. Once that realization struck me,” he says, he knew which direction to head in.

Riley had tasted the fruits of outsourcing from an earlier experience with Perot Systems. He had used that company’s talent within Prince William’s business office for nearly two years, to attack and reduce 90–day old accounts. By the time he brought Precyse into the healthcare organization, “the dynamics started to play in an interesting way,” he says, as the solution to getting the experts in and the job done manifested itself.

Consistency is the main advantage of outsourcing for
Riley. “Often, when an organization recruits an HIM director or business office manager, everything is okay for a couple of years. Then, understandably, that person wants career growth. She wants to move up on a career path, and the organization must recruit again. Outsourcing is one way to build consistency in leadership into an organization.”

Evaluating the Evaluator
Riley doesn’t mess around when it comes to outsourcing. Although he was very pleased with Hughes and the Precyse team, late in 2005, he contracted with yet another vendor to come to Prince William Hospital and assess how Precyse was performing. In effect, he turned the evaluator into the evaluated, and he says Precyse passed with high marks.

Prince William’s 2005 metrics reflect both achieved service level agreements between Precyse and the healthcare system, as well as improved performance levels for the Prince William organization. These include:

Metrics are measured every month to ensure consistency in performance, and a quarterly meeting takes place between Riley and the Precyse team to plan future directions.

Outsourcing has helped the hospital strengthen its automation effort. Today, all physicians are capable of generating electronic signatures for charts. The organization uses a MEDITECH system, and Riley says the hospital is readying itself for electronic order management and that some electronic charting has transpired.

To date, Riley and the Prince William organization have outsourced about 25 to 30 employees in the business office (to Perot Systems), and another eight to 10 transcription employees (to Precyse Solutions) and, of course, the 25– to 30–employee HIM department to Precyse. “I hope this is a sign of being progressive,” says Riley. “All the employees are still here on site. The directors are here on site, using systems that are here on site. But, we have taken select functions to the next level with outsourcing.”

For more information about health information management services from Precyse Solutions,–208