In health care, we are all too familiar with the economic principle of scarcity. There is scarcity everywhere you look. The scarcity of registered nurses is well documented, and it is forecast to get worse as baby boomers retire.
As managers, we face scarcity of time—which, in turn, creates opportunity cost. Explained simply, opportunity cost is what you have to give up when you choose one option over another.
Because of the deficits that all home health agencies consistently deal with, there are opportunity costs everywhere. We constantly have to juggle people, time and resources to meet the needs of our patients. When we find great people who are good at their jobs, we promote them, give them additional responsibilities, teach them leadership skills and talk work-life balance—which is in itself a scarcity and an opportunity cost. The investment in people and promotion of people are essential.
The fact is, we don’t have enough time in the day to get everything done. In home health, administrative and support staff are collectively overburdened. They are expected to handle staff, budgets, paperwork, caseloads, schedules, compliance, training, coaching and, oh yes, managing day-to-day activities. There are certain balls in the air that must not be dropped.
How do we reduce the heavy burden on administrative and support staff so they can focus on what they’re really good at? Many would much rather be doing the tasks they love to do and what they are great at. Many don’t realize there are other options available. What if someone, somewhere is better at something than we are and is willing to do it for us? What if that frees up our scarce time to focus on essential things and allows us to leverage our strengths?
In our world, there is a scarcity of skilled nursing available to help patients. A lot of those skilled nursing resources are spent on administrative tasks such as reporting, diagnosis coding, OASIS review, auditing and compliance measures. Many internal coders work seven days a week, late into the night, just to keep up. They aren’t able to spend the time they wish they could on charts because there is simply too much to do. And when people or staff are overburdened and overworked, mistakes can happen, sometimes costly ones such as ADR and denials.
Coders are a very scarce resource. Certified RN coders are a very, very scarce resource. Certified RN coders, who really love coding and OASIS reviews, are even harder to find.
Of course, there are advantages to doing things internally. Reliable continuity and vested interests can motivate us to stay internal.
Dr. Travis Good, CEO and co-founder of Datica, says in this blog post, that internal resources can be beneficial because they know established protocol and understand patient requirements and internal procedures better than external resources. However, those can also be taught to outsourcing partners.
Why Outsourcing Is Strategically Advantageous
Dr. Good gives three reasons that outsourcing can be strategically advantageous to an organization and create additional value for your organization.
- Economies of scale
- Economies transcend corporate boundaries
- Savings are sufficient to create a profit after stakeholders are paid
Dr. Good said, “The key to survival lies in leveraging organizational attributes while enacting continuous incremental improvements in effectiveness and efficiency—more often than not by using third-party vendors.” Dr. Good also gives some criteria to measure and recognize the true value of outsourcing in both monetary and intangible terms.
- Employee gratification. Does it make our staff happier and make their life easier collectively?
- Consumer satisfaction. Does outsourcing maintain or increase our ability to provide a superior customer experience? Does this allow us to focus more on our core values and improve patient outcomes?
- Economic value contribution. Does outsourcing allow cost savings and efficiency or resource reallocation to focus on strengths?
- Competitive advantage. Does this make the organization better? Are other organizations doing this better than we are because of outsourcing?
- Allocation of resources. Does outsourcing deliver reliable quality and even better quality than the organization can produce? Does the core competency of the outsourcing partner offset, outweigh and/or complement our organization’s core competencies? Do they have more experience than our staff? Can they do it faster, better, less expensive and realize more revenue? What are the costs of keeping things internal? Do we pay less for outsourcing than we do in salaries, benefits and time for internal? Does the opportunity cost of staying internal cost more than outsourcing?
In many cases, the answer to whether or not to outsource is “yes.” The scarce resource of labor, skill, knowledge and time for administrative staff makes it so that outsourcing certain tasks allows staff to focus on patients, which improves patient outcomes and helps relieve stress.
When our folks are less stressed, quality improves. Employee engagement improves. Productivity increases. Happy workers are usually more productive workers. Turnover decreases. We can then allow our rock-star employees to do what they do best—less administration and more innovation and improving outcomes.
With PDGM just around the corner, the need for agencies to partner with the right people to ensure OASIS and diagnosis coding is correct has never been higher.
Agencies can no longer rely on heavy therapy use to generate revenue. With therapy visits no longer a part of the reimbursement calculation, it comes down to OASIS and diagnosis coding to determine reimbursement.
Agencies that do not get OASIS and diagnosis coding correct may not survive. Those that do will not only survive, but also thrive. Agencies that wait until 2020 to address the issue will find themselves behind the curve.