What's it like to outsource to Optum? A New York health system CEO explains

Health systems across the country have outsourced administrative functions to UnitedHealth Group's Optum in an effort to cut costs and streamline operations.

One of those systems is Cooperstown, N.Y.-based Bassett Healthcare Network, a rural, integrated organization with five hospitals and a medical group that employs 630 clinicians.

In 2021, Bassett tapped Optum to provide IT and revenue cycle management services. As part of the deal, 500 Bassett employees performing in-house functions had the opportunity to transition to Optum as their employer. 

Optum has previously inked similar partnerships with St. Louis-based SSM Health, Greenbrae, Calif.-based MarinHealth, Boulder (Colo.) Community Health, Walnut Creek, Calif.-based John Muir Health, Brewer, Maine-based Northern Light Health, Owensboro (Ky.) Health and Tacoma, Wash.-based Virginia Mason Franciscan Health.

Mike Valli, president of Optum's Northeast Region, previously told Becker's that Optum is poised to enter into similar partnerships this year.

"I would not be surprised if that's what you see in 2023," he said.

Becker's sat down with Tommy Ibrahim, MD, president and CEO of Bassett Healthcare, to learn more about what the health system's partnership with Optum has achieved more than two years later.

Question: In 2021, you were one of the first health systems in the country to outsource some operations to Optum. What were the main challenges facing Bassett that led you to this decision? 

Dr. Tommy Ibrahim: For us, it was a reflection over what we are going to be as we evolve into the future and identifying what our core competencies are as an organization. More importantly, identifying the non-core competencies that we've tried to manage on our own, and quite candidly, opportunities that we've left on the table. When we went through that honest assessment, it became glaringly obvious with things like information technology, our ability to recruit talent, and being able to address critical gaps in cybersecurity.

In some of the other key areas like revenue cycle, we knew early on we had to inject automation and other technological advances to help streamline the friction in the system, and that requires expertise and capital — two things that are very scarce for a rural healthcare system. 

Q: It's been more than two years since the partnership went into effect. What have been some of the main takeaways from your collaboration? 

TI: By no means is the partnership perfect, and there are still friction points that we continue to work through to get to the ideal future we envisioned going into it. Having said that, there are very clear performance indicators and service level agreements that we've put around each of the key areas, and Optum continues to deliver on the initial goals and outcomes that we targeted going into the partnership.

There was also a significant ROI benefit going into the partnership because a lot of it is over a 10-year term, and we're now starting to see those benefits come online. We did have immediate savings because of the scale they were able to provide us, and we're starting to see improvements in the revenue cycle side of the equation as well. There's always more opportunities to enhance the efficiency and effectiveness of the relationship, but we've been very pleased with it because they've provided access to leading experts across a number of domains. We're a better organization to have them than to not.

Q: A Maine health system with a similar Optum partnership said it expects to save $1 billion over 10 years. How much do you expect to save over the coming years through your collaboration?

TI: For us, it's about $250 million saved over the course of 10 years, so about a $25 million savings rate for us every year — we are trending positively toward that number right now. 

Q: How have your employees responded to this collaboration?

TI: There's been a lot of change, and I think change is always difficult. If you layer the timing of our partnership with COVID-19, along with paradigm shifts that we've all had to experience in healthcare, that creates a lot of tension and heartburn for folks, and we've certainly seen some of that. 

But for the most part, our employees have been treated very well in this process. We were very deliberate about making sure that no jobs were terminated as a result of this transition. We wanted to ensure people's compensation stayed the same or got better across the board. Most of all, what resonated a lot with people is that they're now part of an organization that could offer them much broader career opportunities in the future than we could. We've already seen folks who have moved up the ranks in this transition. So overall, things could always be better, but there's good cultural alignment and staff engagement, so things are mostly going really well.

Q: What would you say to other hospitals considering similar partnerships?

TI: For us, it was about customization. These partnerships are not and cannot be one size fits all because we are a very unique organization and a very unique community. We are a legacy-driven and historic organization that has been around for more than 100 years, so we wanted to preserve our identity and make sure there was cultural and strategic alignment. We went through a very deliberate due diligence process to ensure that all of those boxes were checked off. 

I think the main decision-maker for me was Optum's ability to take a very tailored approach to meet our unique and specific needs. They didn't invoke a take it or leave it mindset, and they really worked with us to shape the partnership to how we felt it needed to be. We also wanted a single-source solution for some of these various areas. One individual partner that can do it all has been a big success factor for us.


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