Back office outsourcing is one of the most mature outsourcing segments, and it has evolved greatly over the years since pioneer corporations started sending admin and IT work to offshore locations. In 2015, technology and focus on the customer were two of the biggest trends in back office outsourcing. As we discuss back office & medical billing outsourcing in 2016, you'll find that this is expected to continue in the year, with more emphasis on technology and innovation and their roles in business transformation. For outsourcing vendors and businesses that are using or considering outsourcing as a strategy, gaining that crucial edge can come as a result of paying attention to the industry trends.
Outsourced Back Office Services
A recent survey revealed that outsourcing of payroll and HR was most prevalent in Latin America, followed by North America and the European Union. Both small and large enterprises in these regions are engaged in outsourcing. Meanwhile, more than 80 percent of global companies in the survey kept finance and accounting in-house, with the exception of Latin America. Companies in most regions are also increasing FAO activity, with 8 percent of businesses planning to outsource this function in the future. This trend is expected to continue in 2016 and beyond.
For companies outsourcing back office services, here’s what to expect in 2016:
1. Rising popularity of software-as-a-service. It’s normal for administrative departments to stick with their ERP systems for five or more years. The rise of cloud services has changed all that by making it easier to install, integrate and manage new platforms.
2. Other cloud services continue to grow. While still in the early adopter stage, cloud services tailored for back office operations will remain an alternative for companies looking for flexibility and lower costs. Using cloud-based HR solutions eliminates the need for HR managers to upgrade the system every year and spend on training and downtime. Instead, upgrades are done automatically by service providers.
3. More integration. In 2016, there will be fewer process and system silos and more integrated platforms. Although many companies still use separate systems for HR, benefits, payroll, document management, recruitment and data entry, centralized data tracking and reporting will grow in the coming years. The benefits of integrated solutions are well understood. For example, an integrated human resource management system for a hospital can track and report data for every employee in the organization to avoid costly penalties and comply with new regulations.
4. Growth of outcome-based outsourcing agreements. Cost reduction used to be the primary reason businesses outsource back office tasks to third parties, but clients can now take advantage of innovative pricing models. Clients can now pay the vendor based on the right outcome. This trend is expected to continue in 2016, as BPO providers offer custom solutions for specific client needs. For example, if the vendor exceeds delivery speed or quality targets, the vendor receives a higher fee or a similar incentive.
5. Multi-sourcing models. Multi-sourcing and sourcing back office services from different locations will remain a trend in 2016. While working with multiple vendors in different areas can be more complicated, this model is appropriate in certain cases. A company looking for document management and payroll specialists can often find expertise from different providers. Selection criteria for back office outsourcing vendors will continue to vary by region. In mature markets, companies that outsource back office services mainly consider service reliability, pricing and trust. On the other hand, companies in emerging markets prioritize service reliability, the vendor’s understanding of the business and trust in the supplier.
6. Better data security. Increased security risks accompany rapid technological innovation, and service providers will continue to get better at ensuring the security and privacy of sensitive data belonging to their clients. Organizations are aware that even the best security systems are not immune to attacks, so they are taking a more proactive role through the use of risk mitigation tools.
8. Continued demand for soft skills. Soft skills or intangible assets that back office service providers bring to outsourcing partnerships will continue to be in demand in 2016. Soft skills such as communication, trust and the quality of relationship between client and vendor are often the primary determinants of outsourcing success.
Medical Billing Outsourcing
The global healthcare industry, including medical billing, has been undergoing massive change for some years now. The rollout of the ICD-10 system in the Unites States in October 2015 has compounded existing challenges for this segment. Looking ahead, analysts expect 2016 to be a period of transition of healthcare organizations, with medical billing outsourcing activity rising exponentially.
A study published by Technavio predicts that the global medical billing outsourcing market will grow at a CAGR of 9.29 percent from 2014 to 2019. The U.S. remains the biggest source segment for the medical billing outsourcing market, followed by India and Europe. The continued growth of medical billing outsourcing will be driven mainly by regulatory changes and an increased need for cost-effective operations. In addition, aging populations in developed economies and unequal availability of patient care and rise of chronic diseases in emerging countries are also expected to boost overall healthcare spending.
Here’s what lies ahead for medical billing outsourcing in 2016:
1. Increased dependence on technology. Healthcare organizations will intensify their dependence on technology and innovation to run daily operations in 2016. In-house IT departments will play a major role in ensuring process efficiency, profitability and high-quality patient care. However, many companies will continue to struggle with medical operations, healthcare management and service delivery.
Outsourcing firms will step up to extend the capabilities of businesses that range from private physician practices to large hospitals.
2. EHR systems go mainstream. Mass adoption of electronic health records is expected in 2016. More than 80 percent of physicians in the US already use an EHR system, but EHR adoption will become more widespread in the next few years. Healthcare providers and professionals will be motivated to switch to digital because of incentive programs as well as issues with legacy systems and outdated tools.
3. Increased interoperability. Paperless and connected medical billing systems depend on interoperability. Companies will continue to focus on consolidating disparate medical platforms and allowing seamless communication among systems, within the organization and among healthcare groups. Interoperability should streamline and speed up revenue cycles and improve the accuracy and speed of information transfer. Outsourcing providers offer IT and integration services to help companies achieve these goals.
4. Simplified claims submission. In 2016, the ICD-10 system is expected to simplify the claims submission process due to its higher degree of specificity. Companies that have worked with outsourcing providers to prepare for the transition to the new system will gain the most benefits. Payers, physicians and healthcare organizations will have access to better information, leading to more accurate reimbursements. Accuracy also makes it more difficult for shady providers to use vague codes and bill for unnecessary services.
5. Positive job outlook for medical billers and coders. Despite increased automation and coding software integrated into practice management platforms, analysts expect a positive job outlook for medical billers and coders in 2016 and the next ten years. Skilled medical coders with in-depth knowledge of ICD-10 will continue to be in demand not just in the U.S., but also in near-shore and offshore locations. Staff turnover for local coders is very high, forcing many companies to work with offshore providers. Many health organizations already have long-term partnerships with medical billing providers in the Philippines and India, and new deals are expected to increase as demand for skilled billers and allied health professionals rises.
6. Increased outsourcing activity for small physician practices. Kareo’s Black Book reports that about 90 percent of solo and small physician practices will outsource medical billing services in 2015 and 2016. More than 80 percent of small practices that plan to keep medical billing in-house will work with vendors to integrate billing, EHR and practice management systems,
7. Focus on data analytics. The healthcare industry will continue to move from volume to value in 2016 to improve outcomes and accountability. The transition to value-based service is underpinned by a company’s ability to understand how to improve margins for every case handled. Companies that know exactly how much each procedure costs are way ahead of those with a volume-based mindset. The right analytics and business intelligence tools allow organizations to mine insights from data and use these insights to drive competitive advantage. Both SMBs and larger enterprises are expected to outsource data analytics and relevant IT services to external specialists to achieve these goals.
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