Partners Healthcare reportedly outsourcing some jobs, a financial tactic that has pros and cons

Brigham and Women's Hospital
The Partners Healthcare system, which includes Brigham and Women's Hospital in Boston, is reportedly considering outsourcing some jobs to India. (BWH)

Two big healthcare names are in the news this week for reported layoffs, including one case where call center jobs would be outsourced to India, where labor is much cheaper than in the U.S.

There are reports that Kaiser Permanente plans to lay off hundreds of call center employees and move their jobs to other areas of California where the pay is lower, according to the San Gabriel Valley Tribune, although Kaiser has disputed the figure.

“The union’s claims that we have announced 700 layoffs at our call centers is simply not true,” the company said in a statement. “The union’s claims are premature and may in fact be wrong … As we determine the potential impact to employees, plans will be finalized and shared with them.”

This week Boston-based Partners HealthCare told about 100 employees they are being let go and their jobs outsourced to India, where workers will perform the same tasks for a much smaller paycheck, The Boston Globe reported. Partners did not immediately respond to a request for comment. 

In January, Intermountain Healthcare also announced plans that it would switch more than 2,000 of its nonclinical workers to a new employer, R1 RCM. The hospital system said the move will save it $70 million over three years.

RELATED: In an effort to cut costs, Intermountain will transfer 2,300 staffers to revenue cycle firm R1 RCM

The pros and cons of outsourcing

Hospitals have been experimenting with outsourcing for a while now. Many have found success, especially with services such as radiology and tasks such as coding, billing and collections.

The cost-benefit is obvious, but those savings can do more than augment the bottom line.

Hospitals can invest the money they save in tasks that can’t be outsourced, such as increasing nurse-to-patient ratios or keeping up in an increasingly competitive physician recruiting environment.

RELATED: Family practice, internal medicine physicians are in demand; signing bonuses at an all-time high

Still, some organizations have made outsourcing missteps.

Newport Hospital and Health Services in Washington started getting angry calls last year when patients' bills jumped from less than $500 from the hospital's doctors to more than $1,600 from EmCare, one of the nation’s largest physician-staffing companies.

The problem: Even when the hospital was in a patient’s insurance network, physicians employed by those companies often were not, resulting in surprisingly high bills.

RELATED: Newport Hospital and Health Services executive says outsourcing ER turned out to be an insurance 'fiasco'

"The billing scenario, that was the real fiasco and caught us off guard," Tom Wilbur, Newport's chief executive, said at the time. “Hindsight being 20/20, we never would have done that.”

The hospital ultimately took back control of its coding and billing.

Partners CFO highlights growth, efficiency goals

Partners, a not-for-profit hospital and physician network that includes Brigham and Women’s Hospital and Massachusetts General Hospital, reported “strong first quarter results” in an announcement last week, driven in part by growth in volume and performance at its payer arm, Neighborhood Health Plan. 

Total operating revenue increased $201 million (6%) to $3.4 billion in the first quarter of fiscal 2018, the organization reported. Total operating expenses increased $69 million (2%) to $3.3 billion, reflecting increases in wages and benefits ($82 million, 5%), supplies and other expenses ($53 million, 8%) and a reduction in medical insurance claims ($104 million, 21%).

“Our challenge through the fiscal year will be to continue executing on our growth and efficiency plans so that we are able to make investments in patient care, research and teaching on behalf of our patients,” said Partners CFO Peter K. Markell.