Unsurprisingly, given the mounting economic pressures many health systems are facing, we’re beginning to hear more discussions among executives about outsourcing non-core services as a way of containing costs. Whether it’s contracting with an outside company for things like laundry and dietary services, or more extensive outsourcing to vendors for revenue cycle and IT services (such as the much-ballyhooed partnerships with Optum that have grabbed headlines recently), we’ve seen a resurgence of interest in finding ways to offload key areas of non-clinical operations.
In some ways it makes sense: we’ll stick to our knitting, and let someone else handle areas that they’re probably better at. But a recent comment from one system CEO captured our concern about the outsourcing trend. “For us, outsourcing is like Lucy and the football…we’ve been here before.
What we’ve learned is the complexity of managing the vendor relationship often outweighs any potential cost savings. And in the end, we never seem to garner enough savings to make it worth the effort.”
As to the broader “partnerships” around revenue cycle, IT, and population health, she added, “We’d never give up control of those aspects of the business—they’re too important. Plus, I’m not sure how you’d ever unwind it once you’d let your own staff become employed by a vendor.” We’ll be keeping a close eye on these outsourcing deals as the year goes on, and we’d love to hear your experience with the strategy as well.
Workers at three Tenet Healthcare hospitals in Southern California will hold a rally May 6 to highlight their concerns about staffing, wages and benefits during the COVID-19 pandemic, according to the union that represents them.
The rally comes as the National Union of Healthcare Workers is in negotiations with Dallas-based Tenet for more than 600 direct Tenet employees at Fountain Valley Regional, including respiratory therapists, nursing assistants and X-ray technicians. The union is also in negotiations with the Compass Group, a food and support services provider, for about 225 housekeepers and food service workers at Tenet California hospitals in Fountain Valley, Los Alamitos and Lakewood, who are subcontracted by Tenet and employees of Compass.
Union spokesperson Matt Artz told Becker’s workers contend Tenet has remained profitable during the pandemic, but it did not implement appropriate safety measures. He said Tenet also rejected proposals to better staff certain units, and it has rejected the union’s proposal to stop subcontracting out the housekeepers and food service workers who have struggled to afford healthcare.
The union said Tenet, a major for-profit hospital operator, has the financial means to address these issues. The company reported a $97 million profit in the first quarter of 2021. Tenet stock also recently hit a new 52-week high, according to an April 29 report from Zacks Equity Research.
“These profits are not helping workers or patients,” Christina Rodriguez, a respiratory therapist at Fountain Valley (Calif.) Regional Hospital, said in a May 5 news release. “They’re being made at the expense of patient care and the people who have put their health on the line to help patients during this pandemic. At the height of the surge, I would go home crying that we didn’t have enough staff to help patients struggling to survive.”
Tenet contends the issue is not about Tenet but rather about negotiations between Compass and the union. Tenet said it is focused on staff and patients.
“This matter is not about us. It’s about a negotiation strictly between the NUHW and the Compass Group, which is a vendor that provides a range of food, laundry and other support services to hospitals,” Tenet told Becker’s. “At all times, our main concern is the safety of our staff, the integrity of our facilities and the best possible outcomes for our patients, and we remain hopeful that the NUHW and Compass will reach a positive outcome at the conclusion of their respective negotiations.”
But the union said Tenet can decide whether to bring the subcontracted housekeepers and food service workers in-house, which would benefit them in terms of wages and health benefits.
Meanwhile, Compass said it will continue to negotiate in good faith, with union members.
“Our hardworking team members are at the heart of what we do, and their determination to provide best-in-class care and service is inspiring,” a Compass spokesperson told Becker’s.“We take pride in paying competitive wages and providing affordable benefits and continue to uphold our agreement with the NUHW. We have a long history of listening to our employees, working productively with unions, and will continue to meet and negotiate — always in good faith.”
Respiratory therapists, housekeepers, nursing assistants, medical technicians, dietary workers and others represented by the union said they plan to rally from 11 a.m. to noon May 6 outside Fountain Valley Regional.
The rally, scheduled after Tenet’s shareholders meeting, includes workers from Los Alamitos (Calif.) Medical Center and Lakewood (Calif.) Regional Medical Center. Union workers whose jobs are subcontracted to Compass will speak during the rally, the union said.
UnitedHealth Group’s Optum is partnering with John Muir Health to help the system remain independent and become more competitive in California, according to CNBC.
“Optum’s expertise and capabilities will help us expand upon the high-quality patient care we provide to the Bay Area community,” Cal Knight, president and CEO of Walnut Creek, Calif.-based John Muir Health, said in a news release. “We share common values with Optum, and this new relationship will help us further deliver on our mission to improve the health of the people we serve. We are committed to remaining independent while embracing partnerships that help us grow and serve more patients.”
Optum, based in Eden Prairie, Minn., will take over John Muir’s information technology, revenue cycle management, analytics, purchasing, claims processing and other nonclinical functions. Optum and John Muir representatives said Optum will also be involved in John Muir’s physician network ambulatory care coordination and utilization management services.
Optum will hire about 540 John Muir employees as part of the partnership.
Optum, which offers various technologies and analytic tools, told CNBC the partnership provides a model under which it can help small, struggling hospitals remain independent.
Nick Howell, Optum senior vice president, told the TV business news channel: “Optum is not in the business of owning and operating health systems. We see this kind of partnership as a model. A lot of health systems out there are facing similar cost pressures and are trying to find ways to remain independent. We believe this is a new third option for them.”
Optum has been a big contributor to revenue growth for UnitedHealth. It also has emerged as a competitor for some hospitals as it expands its physician workforce.
HENRY KOTULA 