Hospitals phasing out non-clinical employees
Financial pressures are causing more hospitals in Western Pennsylvania to consider outsourcing as a way to trim costs.
The practice of hiring an outside company to handle non-clinical services such as laundry, food service and security appears to be picking up steam around the Pittsburgh region as hospitals try to manage lower reimbursements and falling patient volumes.
Yet the bigger outsourcing trend on the horizon is nonprofit hospitals contracting with for-profit companies to provide medical services, which could blur the distinction between a community hospital and profit-driven enterprise, experts say.
“It's something that started a few years back, and it's something that is a growing trend,” said John Bowblis, an assistant professor of health economics at Miami University of Ohio.
“This is just the start of it,” Bowblis said. “In five years, it will be obvious that this has been going on.”
Heritage Valley Health System in February outsourced its laundry service to save about $600,000 annually, spokesman J. Daniel Murphy said. The Beaver-based hospital network in May hired Allied Barton Security Services to handle security at its two hospitals.
“Our mission is to improve the health in the communities we serve,” he said. “We had to take a look at, ‘Is this our core business?' ”
Highmark Inc. created a company last year to handle purchasing and other supply-chain functions for hospitals around Western Pennsylvania. Provider Supply Chain Partners is helping 15 hospitals — including the seven Allegheny Health Network hospitals purchased by Highmark — get medical supplies at the lower cost.
In late June, UPMC laid off about 130 medical transcriptionists. It sends the work to Massachusetts technology company Nuance. Though Nuance offered to hire all the laid-off workers, some objected to lower pay and reduced benefits with the company.
Helen Johnson was among several transcriptionists who rallied at UPMC's headquarters in the U.S. Steel Tower to oppose the move. Johnson, 55, of Monroeville said she decided not to join Nuance because the health benefits would be too expensive.
She is angry that the region's largest hospital network dumped her after 34 years of service.
UPMC has said that better technology that automatically transcribes doctor notes is “improving our efficiency and reducing our need for transcriptionists.”
Hospitals, from behemoth UPMC to small, community institutions, are struggling with cuts in government reimbursements and reduced numbers of patients.
Managers typically hesitated to give up control of some functions, but the financial squeeze pushes them to examine outsourcing, said Denis Lukes, vice president of financial services at the Hospital Council of Western Pennsylvania, a Warrendale trade group representing most hospitals in the region.
“It's not something they want to do,” Lukes said. “But they're probably feeling forced into doing it.”
UPMC is on the other side of the outsourcing ledger, as well. Its nonprofit subsidiary, ERMI, provides emergency department doctors and other staff to seven hospitals: Clarion, Highlands, Monongahela Valley, Ohio Valley General, Southwest Regional Medical Center, St. Clair and Uniontown.
“ERMI helps its partner hospitals recruit and manage a stable group of high-quality emergency physicians, a huge challenge for community hospitals,” spokesman Rick Pietzak said.
That challenge of finding doctors led some hospital managers to work with a growing number of for-profit companies that specialize in supplying doctors for emergency medicine, anesthesia, intensive care and obstetrics.
TeamHealth, a Tennessee firm, provides doctors to about 800 hospitals, including three in Western Pennsylvania. Barbara Blevins, chief operating officer of the for-profit company, declined to name TeamHealth's clients here.
She said hospitals turn to her because they need specialists who can help achieve better health outcomes for patients — a measure that is becoming more important in determining reimbursement rates from the government's Medicare program.
“There is a financial incentive for them to be lined up with partners such as ourselves,” she said. “(We) provide better patient care and also make sure the outcomes that are achieved are the very best they can be. And that has a financial ramification for the hospital.”
The average hospital that hires TeamHealth is a community hospital with about 200 to 225 beds, Blevins said.
“We have had tremendous growth the last few years and continue to see that this year,” she said.
Although these companies say they help hospitals improve quality, Bowblis said handing over control of medical services to a for-profit company could create a need for the company to raise costs.
Academic studies about the implications of this trend don't exist, he said. But in a study of skilled nursing facilities that hired for-profit companies to handle clinical work, such as physical therapy, Bowblis said he found a significant trend of up-coding, or charging insurers and the government higher prices for medical services.
“In skilled nursing it's a money game,” he said. “They're trying to get the highest reimbursement codes that they can.”
Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or firstname.lastname@example.org.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Stocks finish weak before Thanksgiving holiday; energy firms give back some gains
- Union leaders warn Post-Gazette newsroom of possible layoffs
- Covestro leader MacCleary finds stability amid change
- Black Friday loosens its hold on the holiday season
- Pa. PUC looks to update safety rules for electric utilities
- German financial giant Allianz SE slashes coal investments
- Mall stores required to open for Thanksgiving
- Feds upgrade GDP’s growth
- Improving economy challenges retailers seeking to boost ranks for holidays
- ‘Word people’ could start careers as court reporters, medical scribes
- Pa. unemployment rate dips to 5.1% for October