the health strategist
institute for continuous health transformation
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Joaquim Cardoso MSc
Chief Researcher & Editor of the Site
April 25, 2023
ONE PAGE SUMMARY
Recently in Brazil HCor has published that it has outsourced it´s Laboratory Services to Fleury. The space will be utilized to add new beds to the Hospital
This article examines the trend of outsourcing hospital laboratory services and its possible unintended consequences.
- Outsourcing laboratory services has become increasingly common in hospitals due to cost-cutting measures and the promise of improved efficiency.
- However, the outsourcing of these services has resulted in unintended consequences that can negatively impact patient care, including longer wait times for test results, reduced quality control, and a lack of continuity in patient care.
- In addition, outsourcing has been found to have a negative impact on the morale and job satisfaction of laboratory staff, leading to high turnover rates and potential shortages in skilled labor.
This article recommends that hospitals carefully consider the potential consequences of outsourcing laboratory services before making any decisions and work to mitigate any negative impacts on patient care and staff morale.
DEEP DIVE
Outsourcing Hospital Laboratory Services for Cost Transformation in times of Crises
Hospitals and healthcare organizations are facing multiple challenges.
The transition from fee-for-service healthcare reimbursement to value-based care reimbursement as reflected below is at a difficult phase. Reimbursement from fee-for-service is declining more rapidly than the revenue is increasing from value-based care.
This situation compounded by the global pandemic has underscored the precarious financial state of many healthcare organizations. Thus, there is a growing need for these institutions to find new sources of profitable income, and efficiencies to enhance the net operating income from current activities.
As a result of these financial pressures, outsourcing has become an increasingly common cost reduction approach employed by hospitals and healthcare systems.
Possible Unintended Consequences
In a recent article “The High Stakes of Outsourcing in Healthcare” published by Leonard L Berry PhD MBA et al. in The Mayo Clinic Proceedings, the authors pointed out that this strategy can have numerous unintended consequences, including inconsistencies in standards of care, harmful medical errors, decline in patient and employee satisfaction, and damage to clinicians’ morale and income, as well as the healthcare organization’s culture, reputation, and long-term financial performance if these potential relationships are not carefully reviewed.
There are high stakes of outsourcing healthcare services that directly affect patient care such as emergency medicine, radiology, laboratory services, and environmental services, which are among the most commonly outsourced hospital services.
The clinical laboratory:
- Represents only 3% to the healthcare expenditure in the United States while generating 60% to 70% of the information in the patient’s medical record, thus representing a significant untapped operational leverage
- Generates data that either triggers or confirms the vast majority of patient-related medical decisions
- Contributes information needed for every patient’s care in nearly every care setting
- Responsive to health system service needs, as a result the laboratory possesses capacity concerning its plant and equipment during off-peak periods
- Expand diagnostic capabilities associated with genomics and molecular diagnostics in support of the health system’s “personalized healthcare” initiatives targeting more efficient and effective local patient care
- Supporting the providers with access to cutting edge information concerning these new technologies and in meeting their demanding schedules from a diagnostic workflow perspective
Due Diligence
Clearly, outsourcing this critical clinical service requires careful consideration. In their article, Dr. Berry and colleagues outlined the following key questions which health systems should diligently consider before establishing an outsourcing relationship:
- Will our patients benefit?
- Will we enhance patient safety?
- Will our employees benefit?
- Will our third-party payers benefit?
- Will we strengthen our overall capabilities as we pursue a broader organizational strategy?
- Will we increase our organization’s flexibility and innovation?
- Will we bolster our organization’s reputation brand?
- Will we improve our long-term, not merely our short-term, financial performance?
