Eric Slimp
Cost Containment Corner - 7 commonly outsourced clinical services
May 01, 2015
By Eric Slimp
U.S. health care providers are faced with solving the supply shortfall of medical professionals while the demand of patient care continues to grow. Because of health care reform, the number of insured people is anticipated to grow by approximately 20 million in 2015.
However, the supply of physicians, registered nurses and other health care professionals is not following suit. Health care providers are not only feeling the staffing squeeze, but they are also experiencing financial pressure to provide high-quality care in order to receive reimbursement.
Hospitals are finding innovative ways to maximize cost containment, and focus on their core competency of delivering care and achieving high-quality outcomes. Hospitals across the country, especially in rural areas, are experiencing difficulty finding medical professionals and, therefore, creating strategic and cost-effective solutions to outsource clinical services to a third party.
A recent MD Buyline white paper has now determined that there has been a 62 percent spike in the rate at which health care providers have been evaluating clinical purchased services. Lithotripsy, diagnostic mobile imaging, laser therapy, intraoperative neurophysiologic monitoring, pharmacy, human genome sequencing and virtual ICU services are seven of the fastest growing clinical services — in addition to previously reported trending fee-for-service clinical categories.
Because demand for these services has grown so rapidly, we advise being mindful of hidden costs, price increases and scope creep. To maximize your cost-containment efforts, take a look at the following tips for the seven most commonly outsourced clinical services:
1. Lithotripsy: Pricing is based on a flat rate by type of procedure. Procedure volume per day can dictate discounting, so a facility can maximize savings by scheduling multiple procedures on the same day. Vendors may try to hide costs in contract language (e.g., a volume threshold set at a certain price). If possible, remove these conditions from the contract to drive cost containment.
2. Diagnostic mobile imaging: Pricing is determined by the equipment model and number of procedures per rental term. Be cautious of additional fees, such as consumables (e.g., linens, film, gowns, syringes, needles, cardiac rubidium and FDG radiopharmaceuticals), cleaning, transportation, set up, service maintenance and location of the equipment.
3. Laser therapy: Pricing is dictated by the type of laser and based on a per-procedure use. The main driver for skyrocketing laser therapy cost is consumables (e.g., fibers, filters and tubing). The best approach to controlling consumables costs is by negotiating these supplies separately with a different vendor. However, some service providers restrict facilities from using outside supplies.
4. Intraoperative neurophysiologic monitoring:
Pricing is based on technical and professional monitoring per case, type of procedure monitored and length of time monitored per procedure. Tubes, grids, probes and other consumables can trigger higher contract fees. It is wisest to fully review and benchmark these items in the contract before signing.
5. Pharmacy: Pricing is often structured by order or hour. Not all hospitals outsource services entirely, so it is important for contracts to be clear in the tasks that will be performed by the contractor and the hospital staff, in order to avoid inadvertent duplication of services.
6. Human genome sequencing: Pricing varies depending on coverage, number of lanes and additional cancer analysis. Hospitals should explicitly state the coverage level (e.g., 40X coverage), lanes per genome to be run, or characterizing and identifying cancer cells in the contract.
7. Virtual ICU: Pricing is based on per-bed or per-case fee. Charges per-bed are based on volume and often tiered. Service providers may try to hide implementation, licensing, technical desk support, cancellation and training fees in the contract. If possible, include key performance indicators in the contract, such as reduction in mortality rates, length of stay, complications and morbidity scores.
Educating yourself about the seven most commonly outsourced clinical services as well as taking a look at other services your facility offers that could be outsourced will help you determine the right course of action and best choices for your budget, your staffing needs and your patients.
About the author: Eric Slimp joined MD Buyline in 2013 where he applies his industry knowledge and experience to optimize hospitals’ management of purchased services. He performs contract reviews in order to ensure that hospital clients are obtaining industry-best pricing and contract terms. Slimp informs the hospital purchased services’ sourcing personnel of industry trends and negotiation strategies tailored to each contract and purchased service category. He graduated from Texas A&M University in 2010 with a Bachelor of Arts in biology.
U.S. health care providers are faced with solving the supply shortfall of medical professionals while the demand of patient care continues to grow. Because of health care reform, the number of insured people is anticipated to grow by approximately 20 million in 2015.
However, the supply of physicians, registered nurses and other health care professionals is not following suit. Health care providers are not only feeling the staffing squeeze, but they are also experiencing financial pressure to provide high-quality care in order to receive reimbursement.
Hospitals are finding innovative ways to maximize cost containment, and focus on their core competency of delivering care and achieving high-quality outcomes. Hospitals across the country, especially in rural areas, are experiencing difficulty finding medical professionals and, therefore, creating strategic and cost-effective solutions to outsource clinical services to a third party.
A recent MD Buyline white paper has now determined that there has been a 62 percent spike in the rate at which health care providers have been evaluating clinical purchased services. Lithotripsy, diagnostic mobile imaging, laser therapy, intraoperative neurophysiologic monitoring, pharmacy, human genome sequencing and virtual ICU services are seven of the fastest growing clinical services — in addition to previously reported trending fee-for-service clinical categories.
Because demand for these services has grown so rapidly, we advise being mindful of hidden costs, price increases and scope creep. To maximize your cost-containment efforts, take a look at the following tips for the seven most commonly outsourced clinical services:
1. Lithotripsy: Pricing is based on a flat rate by type of procedure. Procedure volume per day can dictate discounting, so a facility can maximize savings by scheduling multiple procedures on the same day. Vendors may try to hide costs in contract language (e.g., a volume threshold set at a certain price). If possible, remove these conditions from the contract to drive cost containment.
2. Diagnostic mobile imaging: Pricing is determined by the equipment model and number of procedures per rental term. Be cautious of additional fees, such as consumables (e.g., linens, film, gowns, syringes, needles, cardiac rubidium and FDG radiopharmaceuticals), cleaning, transportation, set up, service maintenance and location of the equipment.
3. Laser therapy: Pricing is dictated by the type of laser and based on a per-procedure use. The main driver for skyrocketing laser therapy cost is consumables (e.g., fibers, filters and tubing). The best approach to controlling consumables costs is by negotiating these supplies separately with a different vendor. However, some service providers restrict facilities from using outside supplies.
4. Intraoperative neurophysiologic monitoring:
Pricing is based on technical and professional monitoring per case, type of procedure monitored and length of time monitored per procedure. Tubes, grids, probes and other consumables can trigger higher contract fees. It is wisest to fully review and benchmark these items in the contract before signing.
5. Pharmacy: Pricing is often structured by order or hour. Not all hospitals outsource services entirely, so it is important for contracts to be clear in the tasks that will be performed by the contractor and the hospital staff, in order to avoid inadvertent duplication of services.
6. Human genome sequencing: Pricing varies depending on coverage, number of lanes and additional cancer analysis. Hospitals should explicitly state the coverage level (e.g., 40X coverage), lanes per genome to be run, or characterizing and identifying cancer cells in the contract.
7. Virtual ICU: Pricing is based on per-bed or per-case fee. Charges per-bed are based on volume and often tiered. Service providers may try to hide implementation, licensing, technical desk support, cancellation and training fees in the contract. If possible, include key performance indicators in the contract, such as reduction in mortality rates, length of stay, complications and morbidity scores.
Educating yourself about the seven most commonly outsourced clinical services as well as taking a look at other services your facility offers that could be outsourced will help you determine the right course of action and best choices for your budget, your staffing needs and your patients.
About the author: Eric Slimp joined MD Buyline in 2013 where he applies his industry knowledge and experience to optimize hospitals’ management of purchased services. He performs contract reviews in order to ensure that hospital clients are obtaining industry-best pricing and contract terms. Slimp informs the hospital purchased services’ sourcing personnel of industry trends and negotiation strategies tailored to each contract and purchased service category. He graduated from Texas A&M University in 2010 with a Bachelor of Arts in biology.