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By 2022, Hospital Costs Must Be Cut by 24% and Outsourcing May Be the Solution

Outsourced neonatology team walking through hospital

As the cost of providing quality care continues to rise, many hospitals and health systems are embracing outsourcing various services in order to maintain profitability. According to a recent survey by Black Book, a market research group, this trend is on the rise, and for good reason: their data states that most hospitals need to find a way to reduce costs by 24% before 2022 just to break even.

The value of outsourcing hospital services has been gaining recognition in recent years. Outsourcing critical functions such as IT, administration, and revenue cycle management has always proven beneficial for a health system’s bottom line. Recently, however, the drive to deliver value-based care at the highest quality is pushing nine out of ten hospitals nationally to consider using the outsourcing model to provide clinical expertise as well.

Clinical services, such as neonatology, obstetrics, and medical imaging, are growing in popularity as viable options for outsourcing. Hospitals can benefit immensely from the decades of experience that private groups have to offer. Health networks can also strengthen their brand and grow market share by providing care that might otherwise not be possible, such as having specialists in-house 24/7.

Doctor working to decrease healthcare costs through outsourcing

“Attacking margin by outsourcing one or more areas can actually save jobs in other core departments”

According to Doug Brown, President of Black Book Market Research, LLC, “…hospitals have a cost structure that is not sustainable,” and that is having an effect on the care they are able to provide. Hiring a vendor that specializes in one area of care can not only increase the quality of care being provided, but also bring with it a sustainable cost structure. “As hospitals look for ways to reduce costs, outsourcing is a valid strategy to achieve a financially healthier organization.”

While some may be concerned about losing jobs to outsourcing, the shift in costs may actually be the saving grace needed to keep them. “For hospitals in financial danger with margin pressures placing the entire hospital workforce at risk, attacking margin by outsourcing one or more areas can actually save jobs in other core departments,” said Brown.

The survey states that 98% of hospital leaders are actively investigating how this proven model can add value to their organizations in the clinical and nonclinical realms. According to Brown, “Clinical services outsourcing is the rage because it offers struggling hospitals with immediate alternatives.” With 2022 quickly approaching, many hospitals will greatly benefit from these immediate alternatives as they implement the outsourcing model in a growing number of clinical applications.

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