Growing Facilities ROI, Capabilities by Reducing Contracts

Updated on December 18, 2017

By Matt Keahey, Area Vice President, Medxcel Facilities Management

With a new year on the horizon, you’re again challenged to find new ways to curb spending, get more done, boost revenue, patient satisfaction, and compliance. After all, your job as a healthcare leader is to make each year better and more profitable than the last.

The key challenge, of course, is that the cost of maintaining healthcare facilities has risen considerably. So has your need for specialty skills to fulfill evolving regulatory requirements and service needs.

The good news is that curbing wasteful spending while multiplying your facilities’ capabilities, outcomes and ROI is obtainable for your healthcare organization. But it will require you to take a hard look at your current state, build internal capabilities and break free from external service contracts.

The savings that can cost you double

Often, when hospital execs set out to cut expenses, many choose to cut in-house labor. The short-term savings come at a high, long-term cost, however: Work still must be done, but without the staff or skills to get it done, facilities are pressed to rely on costly external services. Soon enough, they’re handcuffed to external service contracts that cost far more than it would cost to hire and train a skilled worker in-house.

Consider, for example, investing in a senior-level technician at $80,000 per year. This is an associate who’s easily accessible on-site to make crucial repairs with minimal downtime and patient diversion. Someone who knows your processes and systems, the needs and quirks of internal customers, and whose loyalty lies with your organization.

Without that associate, you could easily pay $160,000 per year on a contract for the same work (or less work, most likely)—except that service would be hindered by added downtime, varying contractor availability, and limited knowledge of your organization.

The impact on compliance

Among the regulatory changes in recent months, you may have noticed a much bigger focus on a facility’s infrastructure and physical environment. This shift, plus the fact that the environment of care is the most heavily cited portion of a survey, now requires specialty skills — professionals trained in the physical environment — to pinpoint issues and solutions that would otherwise elude an untrained eye.

Let’s not forget the newly compressed, 60-day timeline for correcting violations. From this point forward, facilities will have no choice but to self-identify and remediate issues early and often to avoid crippling costs.

Real-world outcomes

Let’s move from concept to real-world examples: One hospital we worked with had cut their facilities staff down to a skeleton crew, as many do, to save money. The following year, they were short on manpower, and still had to find new ways to cut more money. By adding staff back to their department and moving some expenses around, the facility started seeing savings rather quickly.

We’ve also documented giant improvements in the compliance realm. Missing data, disparate systems and reports are typical of facilities managed by multiple entities and contractors. The lack of consistency and coordination among all the groups touching your facilities are reflected in your regulatory documentation, and immediately obvious to surveyors, who respond with greater scrutiny. Insourcing enables you to standardize and centralize documentation so your facility is always survey-ready, meaning surveys are far more successful and less stressful for everyone.

Thankfully, these aren’t isolated outcomes, nor a matter of opinion. Data we’ve collected from hundreds of facilities, large and small, show these are consistent outcomes of building in-house capabilities.

Beginning the transition

First, clarify where you are today. High-ROI facilities know exactly what they’re spending on all components touching their facility operations. That starts with a current state assessment that clarifies all costs, contract terms, and performance metrics in your facilities.

This is harder than it sounds, unfortunately. That’s because facilities management expenses tend to be spread out in various departments, miscoded, and service contracts or “bill-above” expenses could be missing from your records altogether. These are common symptoms of decentralized, non-standardized facilities processes.

The central question worth exploring is this: Is your facilities department actively handling work in your facility, or just managing contractors? From there, let the data guide you as you determine your facility’s top needs and risks, and conduct a cost analysis for bringing services in-house.

Note that transitioning from contract-dependent to self-sufficient doesn’t have to happen overnight. Grow in-house capabilities over time by:

  • Sharing services with other nearby facilities.
  • Considering a co-op with your local trade association.
  • Partnering with local schools on curriculum development and internships.
  • Finding a reputable, unbiased partner to manage the transition and contracts you need to retain.

Note that self-sufficiency doesn’t mean you have to do all this by yourself. Rather, you can leverage the intel, tools and buying power of a vendor-neutral partner whose amassed evidence on what works and the best path to get there. That partner should also have skin in the game and shoulder much of the accountability for your program’s ROI. As with most things, the best way to identify such a partner is to talk with facility directors who’ve made a successful transition to insourcing.

Whether you choose to partner-up or go the DIY route, do scrutinize contract spends against what it would cost you to bring those functions under your roof. Worst-case scenario — say, if you find only one contract you can eliminate in the coming weeks or months — you’ll still reap sustainable savings.

Matt Keahey serves as Area Vice President for Medxcel Facilities Management (Medxcel FM) which provides healthcare service support products that drives in-house capabilities, savings and efficiencies for healthcare organizations that, in turn, improve the overall healing environment for patients and staff. Keahey oversees facilities management services for hospital sites throughout the U.S. and manages Medxcel FM’s proprietary integrated service delivery model while focusing on customer relations and strategic development. 

14556571 1295515490473217 259386398988773604 o

The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.

1 thought on “Growing Facilities ROI, Capabilities by Reducing Contracts”

  1. The article is generally right….in that bringing in qualified technicians, even at higher salary is more advantageous than contracting for services. Especially knowing that each time a service contractor is called means no ROI and very seldom leads to improvement or PMS that needs to occur on regular basis. In order to make a maintenance team provide the HIGH ROI, the leadership must execute a High Performance Team environment that has a , PMS system (Planned Maintenance system) to provide scheduling and maintenance and all other areas of maintenance and supply, to organize and support technician training, and to empower manintenance teams. For many years I fought with upper management to fund and improve these areas, while also removing service contracts that provided little or no financial justification. The end results can be amazing with the right leadership and teams.

Comments are closed.