Outsourcing supportive services is key to helping free up staff time. But having too many vendors can end up driving greater inefficiencies. Here are four tips to help find the right balance.
Hospital senior leaders understood and applied the power of outsourcing long before their counterparts in the corporate world. They raced in front of the field for two key reasons. One was out of necessity. Margins are much harder to come by in hospitals, so senior leaders had little choice but to dig deep for operational savings. Outsourcing quickly became a way of life in health care. The second reason was a clear delineation of services. Hospital executives can more easily distinguish core vs. non-core activities than senior leaders in most enterprises. If a specific task involves clinical expertise or includes significant patient face time, they tend to keep it in-house — if not, they can find a highly-qualified partner to do the job faster and more cost-effectively.
Over the past decade, hospitals have become very proficient at driving outsourced savings from “low-hanging fruit,” such as environmental services (EVS), cafeteria, billing, and information technology (IT) services. But, according to a recent Black Book survey, “In order to break even, average hospital costs will have to be reduced by 24 percent by 2022.” This 24 percent reduction is beyond what hospitals have been able to achieve over the past several years.
While the opportunity is there, there is growing risk aversion building among hospital staff and leaders. After years of outsourcing, the number of external vendors supporting hospital operations has increased substantially. With more vendors, that’s more time hospital staff spend coordinating services on other vendor management tasks – time that takes them away from their patient care responsibilities. Not to mention the impact on quality. How is an external, third-party expected to deliver the same level of quality as an internal team that is embedded in the organization and whose goals are tied to the success of the hospital?
The pressure is on hospitals to consolidate their vendor relationships to a select few that truly understand their business objectives and can provide exceptional service. However, achieving that goal is no easy feat. From an outsourcing perspective, here are four tips to consider:
1. Ensure Fast & Non-Disruptive Integration
One of the great risks of outsourcing is choosing a partner who doesn’t mesh with your people or your workflows. Onboarding can be difficult and time-consuming – and sometimes, it never entirely works. Looking to existing partners — people who are already familiar with your teams and your processes — speeds the deployment process and helps increase the likelihood of success. Perhaps most importantly, they also understand your culture. Their service or program offering is going to be more customized to your specific business objectives while offering less disruption during the transition process.
2. Address the Pain & Cost of Compliance
As noted in a recent UHS blog post, a 2017 AHA study indicates that U.S. hospitals, in total, will spend $39B managing compliance in 2018. This equates to $7.6M for an average hospital (161 beds) or $1,200 per admitted patient. Finding ways to reduce the administrative burden of your compliance-related tasks can be one of the more effective outsourcing strategies to pursue in next year or two. Entrusting a partner with portions of your administrative and compliance-related work can drive fast and sustained savings. It can also free clinicians to spend more time on direct patient care. A key, of course, is choosing a partner already familiar with government regulations. Preferably one already performing this kind of work for other hospitals.
3. Choose Partners Who Understand Patient Experience
Improving the patient/consumer experience is in the top three or four priorities on every CEO’s strategic initiatives list for 2018-19. As patients gain more control over their own health care decisions — and as payors increasingly base reimbursement on HCAHPS and other rating tools — the quality and consistency of patient experiences will only increase in importance. Most hospitals have pursued patient satisfaction initiatives for several years, but a majority are now formalizing and measuring the process. Success is vital to the financial health of the hospital. Potential outsource partners who already work in your hospital — and who have experience in thousands of hospitals like yours — intuitively understand your patient experience initiatives. They’re able to internalize your strategies and metrics and deliver on them, just as if they were full-time employees. Or, they can free up time so that your internal teams can spend more time focused on delivering a high-quality experience at the patient’s bedside.
4. Look Deeper into Established Workflows for New Savings
Re-evaluating established workflows might provide the most significant economic rewards. There are costly workflows embedded into every hospital that escape scrutiny when it comes time to drive operational savings. For example, the process of managing movable medical equipment (MME) — including inventory planning, ordering, delivery, tracking, cleaning, repairs and warranty work — is typically managed by nursing, supply chain, and clinical engineering staff. For nurses, managing this equipment cuts deeply into time spent with patients and comes at a high cost for hospitals given average clinician salaries. For supply chain and clinical engineering colleagues, the fragmented process consumes too much time and often results in wasted expense. A deep dive into your MME processes is likely to reveal opportunities for significant and sustained operational savings.
Click the button below to see how one facility achieved these objectives and drove out $1.5M in excess costs.