Outsourcing certain essential hospital services is a growing trend.  According to a study by VHA, Inc., a national healthcare network, and outsourcing consultants Michael F. Corbett & Associates, hospitals are increasingly relying on outsourced services to trim their operational budgets and create more efficient components of healthcare delivery.

According to the study, "The strategy of outsourcing is growing faster in health care organizations than in [the] general industry."  Although healthcare organizations have traditionally been slower to recognize the value of outsourcing key services, the pendulum is swinging in the other direction. 

As healthcare executives realize the cost benefits of outsourcing, it's predicated that a greater chunk of hospital budgets will be earmarked for such services.  The study forecasts:  "The portion of budget devoted to full outsourcing will increase by 30 percent in health care, compared to 11 percent growth in general industry."

One vital service that hospitals are increasingly outsourcing is pre-employment background screening of new employees.  Financial liability for acts and misconduct of its employees is becoming one of the most significant areas of exposure for healthcare organizations.  Hospitals are utilizing background checks as a risk-management tool to limit their liability.

The rationale for outsourcing pre-employment screening

There are typically four reasons why a hospital would retain the services of an outside firm to provide pre-employment screening services.

First, there are numerous tasks that a hospital could certainly perform in-house, such as verifying professional licenses or contacting past employers.  However, some hospitals find that it is more efficient use of their resources to outsource these tasks, even if they have sufficient staffing to do it themselves.  There is a growing trend among profitable and efficient organizations to outsource services that although vital, do not represent the company's core strength.

By outsourcing employment-screening services, a Human Resource professional is relieved of many time-consuming and specialized tasks, and is better able to devote time and resources to the function of managing people and the delivery of vital HR services to their employees.  There are so many vital functions that an in-house HR department can provide, that it makes a great deal of sense to identify those services that can be outsourced to a third party.

Secondly, it is not practical for a hospital to attempt to perform many of the tasks involved in pre-employment screening because of the highly specialized knowledge and resources that are required.  To do pre-screening in-house, a hospital would have to devote time and energy to learn how professional applicant screening is accomplished.  The hospital would have to learn about the many complicated state and federal laws that govern what they can and cannot access.  Furthermore, the hospital would have to find cost-effective sources of the information, such as criminal checks, and invest in computers and software systems.  Given how relatively inexpensive it is to outsource this task, it does not make economic sense for a hospital to attempt these tasks in-house.

Third, by outsourcing these tasks, hospitals enjoy the protection of the federal law governing background screening by outside agencies called the Fair Credit Reporting Act (FCRA).  This law governs the activities of third party agencies.  By following this law, both employers and job applicants enjoy significant legal protection.  If a hospital performs these services in-house, care must be taken to not unduly invade an applicant's privacy.  Hospitals that do perform any screening in-house are well advised to conduct the program under the rules of the FCRA, which includes a disclosure to the applicant that a screening is being conducted, obtaining a written consent, and giving an applicant an opportunity to correct any information before it is used as a basis not to hire.

Fourth, many organizations feel that as a matter of their corporate culture, they do not want new applicants to feel as though other employees of the hospital staff are conducting an investigation into their background.  By outsourcing the task to an independent third party, there is a greater sense of privacy.  Job applicants understand that background screening is a necessary business practice, but many feel better if others in the same organization are not doing the investigation.  In addition, why should an applicant's first contact with the HR Department be a background screening?  HR managers have found that there is a substantial advantage to advising applicants that a professional outside agency conducts the screening.

Safeguarding confidentiality 

Background reports by their nature are sensitive and confidential, and by law, must be restricted to those individuals who are directly involved in the hiring process.  To preserve confidentiality, a screening firm should have policies and procedures in place to insure confidentiality and should work with a hospital to assist in keeping these matters private.  Here are some practical guidelines to maximize confidentiality:

--If a report is to be faxed, the screening firm must clearly determine if the fax machine is a private or secured machine.  If not, the screening company needs to have a "call before fax" policy so that only the intended recipient will receive the report.

--The front page of a screening report should not contain any confidential information, and should clearly establish that the report is a confidential matter.

--A screening company should advise a hospital to set up the following policies in regard to a screening report:

  --All reports should go directly to the   designated HR or security manager that is in charge of the program and should remain only in that person's possession.

  --If a report raises issues that need to be discussed with others in the hospital, the person in charge of the background program should still maintain physical custody of the actual report, unless there are appropriate measures to maintain confidentiality.  Background reports should not be sent through the office mail, or left lying on a supervisor's desk.

   --Reports should be maintained securely and separately from an employee's personnel file.  There is no reason after someone is hired that a supervisor or anyone else should have access to the report during routine personnel matters.  For example, a hospital would not want a supervisor reviewing such a confidential report during a routine performance appraisal.

--If the report is transmitted through an Internet (or Intranet) system or by e-mail, the hospital should ask for assurance from a background firm that they are following appropriate security procedures to maintain confidentiality.  For example:

    --Does the firm have appropriate firewalls and Internet  security in place, with reports being sent in a secured and encrypted manner?

    --Are there adequate password protection and policies in place to verify that only the appropriate individuals can order and view reports?

    --Are there other appropriate measures to ensure that only authorized individuals will receive information, such as periodically changing passwords, or auditing who has access to the Internet (Intranet) system?

Cautionary advice

There are scores of companies that offer similar employment prescreening services.  Some cautionary advice is in order with respect to choosing one firm among competitor companies. 

A hospital should look for a professional partner, and not just an information vendor selling data at the lowest price.  A hospital should apply the same criteria that it would use in selecting any other provider of critical professional services.  For example, if a hospital were choosing a law firm for legal representation, the hospital would clearly want to know that it is selecting a law firm that is competent, experienced and knowledgeable, as well as reputable and reasonably priced. 

Above all, a hospital would want to know that it is dealing with a firm that possesses  integrity.  The same criteria should be used for selecting a background-screening partner.  The following specific suggestions are offered for any healthcare organization that chooses to use a pre-employment screening firm.

1. Expertise-A screening service must have the proven ability and knowledge to provide this professional service.  A review of the company's web site and materials, as well as contacting the firm's current clients for a professional reference, can be helpful in establishing the firm's qualifications.

2. Legal compliance-There are numerous issues surrounding legal compliance. A screening service must understand the laws surrounding pre-employment screening and hiring, and make a commitment to provide an organization with only the information an organization may legally possess.

3. Personal service and consulting-It is critical to keep in mind that pre-employment screening is much more than just providing raw data.  An organization should look for a firm that is available to provide personal service to the hospital or healthcare provider.  A screening company should be able to assist the human resources department in the same manner that any other consultant makes himself available. 
The HR department should expect immediate assistance on any special situations that arise, or if further applicant background investigation is required. 

4. Training-A service provider should be able to work directly with the human resources department and to conduct whatever on-site training and orientation is necessary.

5.   Familiarity with the healthcare industry-It is important to choose a firm that is familiar with the healthcare industry, hospital hiring policies, and the process for privileging medical providers.

6. Pricing-Although it is important to obtain competitive pricing, it is usually not advisable to choose the lowest cost provider. As the old saying goes, you always get what you pay for. 

7. Performance guarantee-A service provider should offer an on-time performance guarantee so that all reports are returned in timely fashion.

8. Internet options-A service provider should also be able to provide reports and related service with an Internet option in addition to faxing reports.

Following these guidelines, hospital administrators or HR managers can make a more informed decision on whether to outsource pre-employment screening services and, if so, determine which service provider to utilize. 

A press release of the study quoted is found at www.vha.com.