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You are George Jones, MHA, FACHE, Chief Executive Officer, Spotsville General Hospital (25 beds), located in an unincorporated rural area in Northwest Texas
You are George Jones, MHA, FACHE, Chief Executive Officer, Spotsville General Hospital (25 beds), located in an unincorporated rural area in Northwest Texas. The hospital has an ongoing problem with revenue cycle management and, currently, has over 31% of its total accounts receivable aged beyond 120 days. In a rural environment, it is extremely difficult to recruit experts in medical billing. Your options are to continue operating with a negative revenue stream or outsource the process. You have assigned, Lucy Rogers, Chief Financial Officer, to prepare a brief analysis of the situation and make a presentation Mr. Jones to either outsource or continue managing the process in-house. Be sure to use references to support your position. The case cannot exceed one page.
Focus your analysis on:
- How do you know when to bring in outside help?
- What differentiates one outsourced service from another?
- What anticipated impact will each approach have on the bottom line.
Expert Solution
Operations Outsourcing
Question One
As the organization grows and the financial flow increases, accounting, and bookkeeping become tedious, requiring financial experts. As financial flow increases, more errors are likely to be made in the presentation of financial statements, including errors of omission, commission, Correction or avoidance of such errors requires a qualified bookkeeper like a Certified Public Accountant (CPA) or a Certified Investment and Financial Analyst (CIFA) holder (Thiefels, 2019). When an organization starts recording multiple and complex financial transactions and cannot handle the pressure, it is the right time to outsource help. Evident from the case study, the financial management of the institution is facing serious manning problems. Therefore, the institution should consider manpower outsourcing at this point.
Question Two
Outsourcing involves an outside organization (third party), separate from the primary organization performing management and transaction operations on behalf of the primary organization. On the other hand, insourcing places new operations onsite within the primary organization. Additionally, outsourced operations differ in terms of access to specific data. Depending on the area where labor-boosting is required, outsourced operations differ from each other.
Question Three
Most organizations` goal is to make profits. Whether an organization insources or outsources operations, the bottom-line anticipation is profitability. As a result, suppose the insource operation as per the case study provided is inadequate to handle the financial pressure. In this case, Spottsville General Hospital should consider outsourcing. In either case, the bookkeeping must be accurate, reliable, understandable, analytical, relevant, simple, comparable, complete, and qualitative (Williams, 2019). Regardless of the criteria employed, these qualities must exist in the financial and management statements.
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