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.

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