Chapter 06: H.R. Outsourcing

Professional Human Resource Options  

[Understanding Professional Employer Organizations] 

By Eric Galtress 

In-house service and support activities are monopolies.  They have little incentive to improve productivity. In fact, they have considerable disincentive to improve their productivity. Clerical, maintenance and support work, do not make a direct and measurable contribution to the bottom line – Sell the Mailroom by Peter F. Drucker 

IntroductionMedical PEO Meeting 

Labor law compliance begins with the hire of your very first employee, thus a well managed human resources (HR) function should be an area of strategic focus by the medical executive, regardless of practice size or the number of employees. Consideration of this vital role can help contribute to an efficient, highly effective and productive professional staff committed to the goals of the practice encompassing a positive and nurturing culture evident to your patients, while maintaining your competitive edge. 

HR is the major expense driver of today’s medical practice and addresses staffing requirements, wages and other compensation, payroll and tax compliance, labor law compliance, employee benefits, training, employee turnover, safety, risk management and workers’ compensation. These responsibilities must be performed in accordance with State and Federal guidelines, beginning with the hire of your very first employee.  

At specific employee level thresholds, employers are required to comply with a growing number of employee-related requirements including State and Federal Laws.  A partial list is shown even though the total number is vast considering each and every State has its own extensive regulatory and compliance burden.  These laws govern the proper method of how employees must be treated and paid, as well as ensuring that their rights in the workplace are protected. State and Federal Regulators each create vast amounts of workplace legislation every year, many of which become law. In most cases, the specific requirement (either State or Federal) that affords the employee the most workplace rights and/or protection and benefits takes precedence over the other.  Non-compliance can subject the practitioner/business owner to hefty fines, penalties, business interruption, litigation, and in some cases, even practice failure. 

In most cases, these HR efforts are backed by labor attorneys, service providers, brokers and other consultants. Given the typical size of a medical practice, this presents a compelling argument that practices should consider taking advantage of an innovative alternative:  being able to delegate (outsource) part or most of the HR burden as well as the employee/employer related liabilities. 

Simply put, instead of the practitioner/staff performing the HR requirements, part or most of this responsibility can be outsourced to an off-site HR services provider that specializes in labor law compliance, employee management and cost control. The practitioner retains functional control of the employees and the service provider handles the HR issues.  Added value is achieved by the practice in receiving these services more cost effectively since their needs are combined with those of the many other practices and businesses the provider already serves. Outsourcing is a matter of simple economics, enabling the practitioner to gain relief from cumbersome employee administration, while enhancing productivity and benefits for the staff members. 

The HR outsourcing relationship is not to be confused with a Physician Practice Management Company (PPMC).  The HR services provider has no financial interest or ownership whatsoever in the practice. 

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6 thoughts on “Chapter 06: H.R. Outsourcing

  1. Transforming Home Health Care Services

    This is a web-based healthcare services company that connects families and patients in need, with local clinical caregivers across the country when seeking licensed clinicians, certified nurse or home healthcare aides.

    It allows patients, family members and caregivers to independently manage the care process through on-line scheduling, messaging, referral, and direct payment transactions. The firm seeks to transform the delivery of home health care services across the country.

  2. Don’t Forget the Hidden Costs of Office Payroll

    Simple Medical Accounting Payroll [Example – Covering]:

    Gross Wages
    Employee Social Security
    Employer Social Security
    Employee Medicare
    Employer Medicare
    Federal Withholding
    State Withholding
    FUTA (Federal Unemployment Tax)
    SUTA (State Unemployment Tax)
    Workman’s Compensation Insurance
    Pension Plan Expense
    Health Insurance
    941 Deposits
    940 Deposits
    IRS Penalties

    Dr. Gary L. Bode; CPA, MSA, CMP

  3. Mr. Galtress,

    Larger medical practices, clinics and hospitals are also outsourcing their back office billing and administrative needs. For example, one such firm is Brainware Inc, a provider of intelligent data capture. PHNS and Cymetrix are two others for revenue cycle management.

    [Chief Operating Officer]

  4. Hospital Personnel, Physician Recruitment, and Professional Employer Organizations

    Hello Eric –

    One way to improve human resources is to recruit physicians and hospital personnel who bring in expertise and disseminate it to other employees.

    For example, hospitals, larger practices and medical clinics are increasingly hiring materials managers from other industries to upgrade their materials management capabilities.

    And, hospitals often lag far behind other industries with regard to professional human resource supply-chain management. Hospitals can hire personnel with experience in other settings in order to gain new perspectives in supply-chain management.

    With these new perspectives, agreements with suppliers can be renegotiated to make a hospital or practice more competitive.

    Hope Rachel Hetico RN, MHA, CMP
    [Managing Editor]

    1. Here in Germany they even want to make laws against Google, motsly because somepoliticians and members of the media can’t state often enough how evil they thinkGoogle is. Google’s overall reputation in terms of user data protection is lessthan ideal, to say the least.I really like Google products, and want you guys to continue with your awesomework. However, you kinda shot yourself in the foot with Street View, at least overhere. Try being less intrusive and it will serve you well.

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