May 30, 2020

Neil Olderman Discusses Health System Offshoring with Modern Healthcare

In the article “Health systems may be warming to offshoring, a mainstay practice for insurers,” Modern Healthcare spoke with Health Care partner Neil Olderman for insight into the growing trend of health systems offshoring their operations.

According to the publication, healthcare providers have been much slower than insurers and drug makers when it comes to shifting work overseas. As providers continue to grapple with the need to cut costs, offshoring has become an increasingly common solution, Modern Healthcare reports.

Olderman, who also serves as president of Innovative Health Strategies LLC, Faegre Drinker’s procurement and outsourcing consulting firm, discussed some of the challenges and opportunities involved with offshoring. He told the publication that “some companies mistake offshoring or outsourcing as engines that someone else operates ‘soup to nuts,’ but it’s not like that at all. There’s a lot of people management involved.”

He added that companies should carefully review contracts with offshoring vendors to ensure they’re not surprised with hidden surcharges. “It’s not uncommon for companies to get hit with technology, report or volume charges,” he said. “The contract should have caps on what a company can be charged that accounts for currency exchange rates.”

“In the end, it comes down to being honest, over communicating, no hidden ball,” Olderman said, “and without putting predictions out there that limit you in a way that’s not likely to stand the test of time.”

Modern Healthcare highlighted that when health systems outsource employees, they’re often paid by the vendor, instead of a health system. In some cases over time, vendors may offshore those tasks to cut costs, which according to Olderman, can be common for health systems to blame offshoring on their vendors. He added that clients always have control over whether or not their jobs are sent overseas. “They could include that in the contract, or simply choose not to work with vendors that offshore.”

Olderman said, “They make it seem like it’s the decision of their partner to have those functions done overseas. ‘It’s not us outsourcing the job overseas.’”

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