Ascension Will Outsource Illinois Hospitalist Functions To PE-Backed Staffing Firm

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Dive Brief:

• Ascension will outsource Illinois hospitalist roles to private equity-backed staffing firm SCP Health beginning June 1, a spokesperson for the health system confirmed to Healthcare Dive.
• Medical directors, doctors, nurse practitioners and physicians’ assistants previously employed by Ascension will have to reapply for their jobs with SCP Health, according to Crain’s Chicago Business, which first reported the story.
• The Ascension spokesperson says the system vetted SCP Health for months to determine a cultural fit with the health system and it plans to transition services with “no gaps” in care quality.

Dive Insight:

Ascension declined to comment on what motivated its decision to outsource hospitalists at its 10 Chicago-area acute care hospitals. However, the St. Louis-based health system has recently struggled financially, posting a net loss of $2.7 billion for fiscal year 2023 with an operating loss of $3 billion.

The system attributed its losses in part to rising expenses, including staffing and labor costs. Ascension’s average wage rate increased slightly between 2022 and 2023, especially for clinical roles.

For-profit health systems have long outsourced hospitalist roles, such as anesthesiologists, radiologists and emergency department physicians, to help health systems fill specialty roles.

Outsourcing clinical roles could also be an attractive short-term cost saving option, as staffing firms tend to offer an “efficient, streamlined means of locating, recruiting, and credentialing staff according to a facility’s unique needs,” according to a November 2021 study published by the Mayo Clinic.

However, the Mayo study cautioned that outsourcing hospitalist roles is “high risk,” and could lead to inconsistencies in standards of care, harmful medical errors and declines in patient and employee satisfaction.

Private equity-backed healthcare ventures have been associated with quality problems and increased prices for patients. The Mayo study found evidence that private equity-backed healthcare staffing firms were associated with similar problems.

Another study conducted by Yale University found formerly PE-backed Envision Healthcare raised out-of-network billing prevalence by more than 80 percentage points when it assumed management of a hospital emergency room.

Outsourcing hospitalist functions could also cause hits to employee morale, warned the Mayo study. Already, labor tensions are high at Ascension. Workers have initiated at least least five strikes during the past year, according to a Healthcare Dive strike tracker.