From marketing to recruitment, many companies utilize outsource organizations that have specialized experience in a certain field and might be able to save the employer both time and money.
Hospitals outsourcing emergency care is not a new practice, but it has become more prevalent in recent years. As you pursue your online MHA degree and enter the workforce, it’s important to grasp the impact this practice could have on your future career. Its increased popularity has consequently attracted greater attention as well as criticism.
From studies to personal testimonies, it’s becoming clear that outsourcing emergency care is not as simple as outsourcing other services. Hospital administrators considering outsourcing their emergency care might be tempted by this practice’s benefits, but they must first understand the risks.
Why Outsource Emergency Care?
To outsource emergency care, hospitals must have sufficient resources to employ the outsourced organization. While smaller hospitals might be hesitant to outsource because they don’t have the same resources as larger organizations do, groups such as EmCare can offer benefits that hospitals might be unable to find elsewhere.
Emergency care provider EmCare claims that organizations specializing in emergency care can “help a hospital improve the quality of care and reduce both costs and risk.” Outsourcing emergency care also allows hospitals to consolidate the costs associated with “running the emergency department, such as recruiting, malpractice insurance, and patient billing.” In an article about outsourcing emergency services, The New York Times adds that hospitals can benefit financially from “the increased testing and admissions EmCare has delivered,” which makes it less surprising that outsourced emergency care is more common at for-profit hospitals than at non-profit hospitals.
The Issues With Outsourcing
If hospitals can benefit from such consolidation and profit increase that companies like EmCare promise, then why aren’t more hospitals outsourcing care? A central issue stems from the problematic treatment of patients at the hands of outsourced doctors. Consider an example shared by The New York Times: Newport Hospital in Washington began using EmCare to staff and operate its emergency room. Up until that point, the hospital had been struggling to staff its emergency department. After it began outsourcing, nearly 28 percent of patients were billed for the most expensive level of care possible. Before EmCare entered the picture, only six percent of patients had been charged with such amounts.
The issue? The EmCare doctors were not part of the insurance networks with whom the hospital had negotiated. Instead, these doctors sent their high bills directly to the patients. This left patients paying at least $1,000 more than they had been charged by Newport Hospital’s previous physicians. Once the hospital began receiving calls from confused and frustrated patients, it reacted quickly by “taking back control of its coding and billing,” according to The New York Times.
Newport Hospital is not the only caregiver to experience the backlash associated with outsourced emergency services. Researchers at Yale found that out-of-network bills and use of the highest billing code increased as soon as EmCare entered a hospital. The researchers noted that the “rate of tests ordered and patients admitted from the ER into a hospital also rose,” but those numbers did not rise as significantly as the ones associated with billing did.
The shift was so rapid that Zack Cooper, one of the study’s authors, remarked that “It looked almost like a light switch was being flipped on.” Fortunately, other studies have determined that these issues do not occur in every hospital in the United States that uses outsourcing. In fact, these cases come from a relatively select group of hospitals. According to the Yale study, out-of-network rates were higher than 80 percent at only 15 percent of hospitals. Many of the emergency rooms in that 15 percent were run by EmCare.
How can the doctors at EmCare and other outsourced emergency service providers get away with charging patients so much? According to The New York Times article, when “emergency room doctors work for a company that has not made a deal with an insurer, they are free to bill whatever they want.” One of EmCare’s physicians, Dr. William Jaquis, defended the practice by saying some insurance companies only offer low payments, leaving emergency room physicians without much choice other than to turn to out-of-network billing.
The New York Times article also claims that hospitals have begun seeing the emergency room as the “front door,” because emergency departments must take all “comers regardless of their insurance,” allowing the hospital to make more money from the patients. In fact, according to a RAND study, emergency departments’ share of hospital admissions has risen from a third to half since the 1990s.
Seeking Middle Ground
With the recent issues associated with some outsourced emergency care providers, many hospitals are understandably hesitant to outsource emergency care. They don’t want to place unnecessary financial burden on patients or damage their integrity. Is there a middle ground where hospitals can enjoy the benefits of outsourcing without suffering its negative consequences?
EmCare claims that it is working to reach agreements with insurers for most of its doctors, according to The New York Times. State governments have also begun taking initiative in protecting patients. California, Florida, and New York have passed laws that limit surprise bills. Kevin Drum of Mother Jones also suggests a solution for hospitals: refuse to work with companies such as EmCare unless the company signs up for “the same networks the hospital advertises itself belonging to.”
Hospital administrators must walk a careful line between providing patients with high-quality, affordable care and providing doctors with the compensation they deserve. If you’re interested in tackling challenges such as outsourcing emergency care effectively, consider pursuing the University of Southern California Executive Master of Health Administration online. Those who earn the online MHA can learn valuable risk assessment skills, take part in the innovation of health care, and gain the necessary skills to improve health care in their workplace.
Recommended Reading:
- 6 Ways Contrarian Leaders Think Differently
- The Baby Boomer Effect and Controlling Health Care Costs
Sources
https://healthadministrationdegree.usc.edu/
https://www.nytimes.com/2017/07/24/upshot/the-company-behind-many-surprise-emergency-room-bills.html
https://www.rand.org/content/dam/rand/pubs/research_reports/RR200/RR280/RAND_RR280.pdf
http://www.nejm.org/doi/full/10.1056/NEJMp1608571
https://forabettertexas.org/surprisebills/img/2017_HW_SurpriseMedBill.pdf