WORKPLACE NOW E-ZINE - FEBRUARY 2013
WorkPlace Now

Outsourcing facilities management to improve healthcare

Due to heightened focus on cost reduction and outcomes management, healthcare providers are considering experience in non-clinical functions through outsourcing partners. A well-conceived facilities services outsourcing partnership can bring healthcare providers higher patient and staff satisfaction, major cost reductions, greater accountability, improved care environments, and consistent regulatory compliance.

 

Quality demands from public and private sector organizations are forcing healthcare providers to scrutinize every detail of their care delivery. In addition, as healthcare providers face lower reimbursements and other severe cost pressures, it’s no surprise they are seeking ways to cut expenses. Many providers have already found one-time savings but are struggling to reduce costs over the long term. Outsourcing facilities services can generally save 15 to 25 percent across real estate, projects and facilities operating costs within a few years.

 

While many healthcare providers already outsource non-clinical functions, some hesitate to do so with their patient environments. Experience in the world’s top corporations shows that well-conceived outsourcing partnerships bring significant benefits in industries with highly critical needs – like pharmaceuticals, petroleum, telecommunications, and data centers where uptime and downtime are measured to the minute.

 

Here are a few lessons about facilities outsourcing from the experiences of companies in the Global 1000 that apply to the healthcare sector:

 

1. Choose a partner carefully

Outsourcers bring facilities expertise that enables the client to focus on their core mission. Industry experience shows the simplest course is to outsource to an integrated partner. Even if a healthcare provider may not have an immediate need for an integrated model, it may be worth consideration in the future. Major providers will be able to bring best practices in matters such as the management of emergency power systems, controlling sophisticated laboratory and surgical environments, and applying optimized preventative maintenance methods.

 

2. Co-create and collaborate

In order for an an outsourcing relationship to be the most beneficial, it must be a partnership with two-way dialogue for planning, operating, and improving. Outsourcing partners benefit from understanding the key issues and strategies of the healthcare provider, who in turn benefit from new innovations, expertise in facilities optimization.

 

3. Appoint a mentor

An outsourcing partnership brings together two organizations with different cultures, politics and ways of communicating. A mentor within the healthcare organization – ideally a respected and well connected executive – can help the outsourcing partner navigate unknown waters: Who gets things done? Who might be an obstacle? What language should or should not be used with key players? 

 

4. Insist on continuity

Outsourcing does not mean letting go of excellent people who have worked on the facilities for years, are “part of the family,” and understand how to interact with clinical staff, patients and families in a care environment. Typically much of the healthcare organization’s staff is retained – bridging local knowledge and familiarity with the facilities.

 

The team then has access to the service provider’s centralized, standardized, and up- to-date training to help them expand their skills, along with proven best practices, tools and technologies to improve their day-to-day skills and value. They also gain a career path of responsibility and professional growth that may not exist with an in-house team.

 

5. Think long-term

The savings goal of outsourcing is not just immediate cost reduction – it is to sustain low cost and high performance in the long run. A long-term focus links the facilities to business strategy and includes protecting the value of assets throughout their service lives. While it is possible to make short-term cost reductions, responsible outsourcing providers seek to optimize long-term asset value – and document it by measuring facility condition at the outset and during the term of the contract.

 

“Because of Joint Commission and a lot of the life safety issues that go with it, people are reluctant to do outsourcing deals around facilities, which kind of amuses me, because it’s not like hospitals have expertise to do this. So to me, I think we actually mitigated our risk for Joint Commission facility issues by bringing in somebody with the expertise to run these buildings.”

 

Bob Meyer, CEO Phoenix Children’s Hospital

 

6. Set a baseline and metrics

A good outsourcing relationship begins with the setting of current baseline conditions against which needs can be assessed and future performance measured.

 

Another critical step is creating a set of mutually agreeable key performance indicators (KPIs), along with performance guarantees or shared savings arrangements as appropriate. KPIs and service level agreements (SLAs) can be tied directly to critical business goals, such as a better healing environment for patients and families and a pleasing work environment for doctors, nurses, and staff.

 

7. Expect to benefit from standardization

In healthcare as in most sectors, organizations with multiple locations often operate facilities as separate entities, with different practices and different tools according to site managers’ preferences. An outsourcing partner will standardize and consolidate functions across sites and achieve substantial efficiencies as a result. This includes:

 

  • Centralizing purchasing.
  • Consolidating vendors.
  • Standardizing maintenance practices.
  • Integrating technologies and systems.

 

8. Expect big cost improvements

There is little point in outsourcing to gain small, incremental benefits. A strong outsourcing partnership should bring major cost reductions: through volume purchasing, energy savings, less frequent equipment breakdowns and repairs, sharing of staff resources among facilities, headcount reduction without layoffs, control of hourly labor costs, and more.

 

9. Look beyond cost

Experience across industries shows that outsourcing advantages are not limited to cost reduction. This is important for hospitals in a time when measures like patient safety and patient satisfaction are being tied directly to Medicare reimbursement rates under the Affordable Care Act.

Outsourcing partners can work with healthcare providers to affect those measures by improving care environments.

 

Outsourcing partners can generally provide better performance than current staff because of the privilege of focus in their area of expertise. They should also have intense, ongoing training programs to keep their staff up-to-date on recent building innovations and technologies.

 

10. Expect more accountability – not less

Among healthcare providers’ fears in outsourcing is loss of control – of personnel, of the care environment, of the level of service. The reality is that outsourcing gives the healthcare organization greater control and accountability than is possible with an in-house team.

 

In-house staffs may lack the resources to achieve true excellence in service delivery and facility performance – especially when faced with budget pressures and staff cutbacks. On the other hand, outsourcing partners have those resources and can be held accountable for meeting the industry’s highest standards.

 

In an outsourcing partnership, the hospital is freed from doing the work and sets the expectations by managing KPIs, SLAs, and performance cost

guarantees.

 

Partnering for excellence

The reason to outsource facilities services is to work with an entity that can deliver better results for less cost and higher quality performance. In the most successful partnerships, the service provider starts with clear expectations and performance metrics and is simply allowed to deliver. Healthcare providers who embrace outsourcing and heed these lessons from other industries can quickly and consistently realize a wide range of benefits beyond what most in-house stafs could ever achieve.

 

 

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WORKPLACE NOW LINKS
TEN LESSONS LEARNED
  1. Choose a partner carefully
  2. Co-create and collaborate
  3. Appoint a mentor
  4. Insist on continuity
  5. Think long-term
  6. Set a baseline and metrics
  7. Expect to benefit from standardization
  8. Expect big cost improvements
  9. Look beyond cost
  10. Expect more accountability  not less
customer-quote-Methodistl
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Facilities management outsourcing
ABOUT THE AUTHOR
Steve Herbst

Steve Herbst, Johnson Controls Global WorkPlace Solutions vice president and general manager, is responsible for strategic outsourcing and operational management of real estate and facilities for clients in the healthcare, higher education and other institutional environments.

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