Outsourcing Health and Medical Services

In today’s highly competitive and extremely regulated environment, healthcare organizations are faced with the challenge of maximizing their resources while also delivering quality patient care. The growing demand for high-quality but low-cost healthcare is transforming private and public organizations. Healthcare outsourcing is one solution that many companies have discovered to control costs and make the most of a company’s existing resources. Healthcare outsourcing is often associated with medical tourism (the practice of traveling to another location, usually a foreign country, to take advantage of lower healthcare costs), but an increasing number of companies are outsourcing non-patient care services that range from coding and billing to information technology. Whatever the size, a company can realize cost savings and increased process efficiency by partnering with an outside expert locally or offshore to handle non-core functions.

Health and Medical Services Outsourcing Market

The healthcare industry is undergoing a major transformation. Technology and sweeping healthcare reform in the United States are redefining patient care and changing the way providers do business. In an uncertain climate where the government and private insurance agencies are reducing reimbursement for clinical and nonclinical services spending, hospitals and medical agencies are finding it difficult to maintain profit margins for certain medical services.

Some companies are unable invest in new equipment and advanced technology. Essentially, healthcare organizations are pressured to do more with less. It is no surprise that many firms are outsourcing medical services to third parties that are capable of dramatically lowering costs.

A study estimates that 70 percent of healthcare companies in the United States outsource their work to external locations due to skills shortages and new regulations. This trend is expected to continue, with the U.S. healthcare BPO market reaching more than $141 billion in revenues in the next three years.

The main drivers for outsourcing in the industry are cost reduction, risk mitigation, and the desire to be more agile (Outsourcing in the Healthcare Sector, the Supply Chain Forum International Journal). Healthcare units like medical centers also outsource services to increase capacity and access resources in response to high demand.

Affordable Care Act

While the fate of the Affordable Care Act may be in question, many of the fundamental shifts in healthcare in the U.S. that resulted from its implementation are likely to remain or be replaced by new systems requiring further adaptation efforts by the industry. According to analytics firm Everest Group, the Affordable Care Act boosted enrollment in healthcare insurance as well as the number and value of claims. Increased claims processing workload has led to large-scale offloading to third parties as a result. Besides the spike in claims, the Affordable Care Act required an overhaul of the prior billing system. These changes have driven an upsurge in medical service outsourcing, particularly in medical billing. Under the terms of the employer mandate, companies that employ 50 to 99 full-time employees were obligated to provide health insurance beginning January 2016. This means additional billing and reimbursement tasks for medical professionals as well as healthcare payers. New, smaller healthcare payer firms have turned to vendors to handle their claims processing and management of providers and members.

ICD-10 Coding System

After years of delays, the United States has adopted the ICD-10 coding system for inpatient hospitals. The ICD-10 (International Classification of Disease 10th revision) system of coding increases the number of billing codes to about 70,000, which is projected to create a strong demand not only for trained staff but also for new software and related IT infrastructure.


The global healthcare industry is finally beginning to catch up with technology, with electronic health records, digital tools, analytics and medical e-commerce promising improved processes, reduced operational costs and better patient care. Analysts project that healthcare organizations and related agencies will partner with experienced vendors that can provide innovation and long-term value.

Outsourced Health and Medical Services

The new regulations and additional measures to control fraud have opened a world of opportunities for medical services and healthcare outsourcing providers to help healthcare organizations streamline their operations, reduce risk through data analytics, increase speed to market for new plans, reduce costs and improve patient care. The most commonly outsourced medical services are medical billing, coding, insurance claims processing, transcription, adjudication and receivables management, and clinical outsourcing.

Medical Billing

Medical billing is the management of billing and accounts receivables for medical professionals and healthcare firms. With the Affordable Care Act and ICD-10, billing work has overwhelmed many companies. Outsourced service providers have absorbed much of that demand, as it can be expensive for small and midsize businesses to hire billing and coding staff and purchase the necessary software and infrastructure.

Just as patient care is the primary function of a healthcare organization, third parties provide medical billing as one of their core services. Many vendors that provide medical billing services are also experienced in medical coding. Working with a third party gives companies access to billing experts and technology that may be too expensive to build and support in-house.

Unlike in-house billing that may be placed on hold due to staff turnover or vacation/sick leaves, outsourced medical billing is handled by multiple billing experts, which means continuous revenue processing and improved cash flow. Because of the difference in time zones, offshore medical billing and coding services can also be performed overnight. Results are ready for the physician or medical personnel in the morning, improving the quality of care and boosting customer satisfaction.

For organizations that want to maximize their resources to the fullest, working with an offshore medical billing provider or hiring offshore medical billing staff is a good option. Many organizations already have partnerships with offshore suppliers in locations like the Philippines, where low labor costs mean bigger potential savings without sacrificing the quality of work.

Claims Processing

Like billing and coding, increases in healthcare insurance claims processing, which involves gathering relevant information (all documentation) from the primary care provider and comparing it with the insurer’s coverage plan, have overwhelmed the resources of many firms. Much of the extra workload is being passed on to service providers that are capable of handling large volumes of claims.

Transcription and Electronic Medical Records

For many years, healthcare organizations have offshored medical transcription to low-cost locations. Transcription is the process of converting audio or video recordings from the primary care provider into paper or electronic documents that can be easily edited, transmitted and archived. Electronic medical records (EMR) are digital versions of the patient chart. They help track data over time and monitor and improve quality of care. Third parties provide transcription services and EMR software development to streamline medical information processing and tracking.

Other Healthcare Outsourcing Services

Some healthcare BPO service providers handle end-to-end management of non-clinical functions or functions that are not related to patient care: data analytics, financial management, software development, IT support, and customer service/help desk.

Benefits of Health and Medical Services Outsourcing for Businesses and Institutions

When hospitals and healthcare institutions outsource non-core services to outside experts, they reduce costs, improve efficiency, boost profitability, and focus on improving the patient experience.

Reduced costs. Clients can save up to 60 percent by outsourcing medical services. They don’t have to spend money to recruit, train, support and oversee full-time employees.

Improved focus. The goal of most healthcare organizations is to provide excellent patient care. When companies outsource admin paperwork and tedious, non-core services, they can focus on what they do best.

Increased profitability. When an outside expert handles the revenue cycle, it can lead to increased insurance collections and improved profitability. Third party healthcare outsourcing services providers know how to maximize reimbursement and reduce denials.

Reduced HR issues. A third party serves as a neutral platform for mitigating employee-employer issues. Staff can feel more confident about airing their concerns and suggesting improvements when they know that an outside expert is handling HR and payroll.

Outsourcing Health and Medical Services to the Philippines

To realize maximum cost savings without sacrificing high-quality service, consider outsourcing medical support staff to the Philippines.

Sourcefit provides experienced, highly motivated medical billing and insurance claims support staff. Members of our staff are detail-oriented professionals who have medical backgrounds and deep industry knowledge. Sourcefit exceeds industry standards for data security and complies with all federal guidelines on record processing and storage.

Please contact us to find out more about Sourcefit’s custom health and medical services.