Outsourcing Excellence Award – Most Visionary – Beaumont Hospitals and Beaumont Services Company, LLC
William Beaumont Hospital is a two-hospital teaching system, with both facilities located in Detroit. Unlike some U.S. hospitals, Beaumont doesn’t dread the Joint Commission (JCAHO) inspectors’ visits. “JCAHO now considers us to be the gold standard in hospital facilities management,” says Tom Brisse, associate hospital director.
Harmonizing
Beaumont’s best-in-class facilities are the result of discussions that began in 1995, as the organization’s leadership acknowledged concerns of its facilities management (FM) staff, claiming there were opportunities to improve performance that could only be realized under a different management structure. Hospital administrators’ time and budgets were rightfully focused on patient care issues. Over time, real synergy grew around their discussions as the healthcare industry compiled successful instances of hospital outsourcing.
When ReSourcing Services Company, LLC (RSC), a holding company that forms standalone outsourcing organizations for facilities management services, brought its model to Beaumont, the problem was solved.
RSC’s expertise and model enabled Beaumont to spin off its FM staff in 1997, marrying them in a joint venture with Jacobs Engineering, Inc. and PriceWaterhouseCoopers, LLC., to provide facilities maintenance, design and construction, and biomedical equipment services.
“As soon as we gave them the attention and resources they deserved,” recalls Brisse, “the whole thing spiraled upward into opportunities.” Structures and systems designed to deliver healthcare are not usually optimal for delivering facilities services; removing these constraints unleashed new potential to improve efficiency.
With implementation of re-engineered work processes and the application of new technologies, the spun-off joint venture became the world-class service provider company now known as Beaumont Services Company, LLC (BSC). Both Beaumont and BSC agree there’s a “healthy pressure” between a customer and an outsourcer, as opposed to the customer and its employees, which keeps BSC on its toes and disciplined in its operations.
At the outset, it was still the same people doing the same work they had been doing as hospital employees. Additional business disciplines, workflow ideas and new approaches were introduced over time. Then they began fine-tuning their services, ratcheting down on costs and driving innovation. The outsourcing strategy proved its effectiveness; both services and costs for the hospital continue to improve.
Fine-tuning
When Beaumont set out to increase its patient satisfaction to an A+ level, the hospital director challenged the BSC folks to join in that effort. In the spirit of partnership, BSC staffers committed to model the leadership activity of “rounding” – the hospital’s terminology for its leaders spending an hour a day visiting with an employee, a physician or a patient.
BSC’s staff might, for instance, do a walk-through of a nursing unit, asking if the nurses are aware of anything unsightly from an aesthetics standpoint, anything that needs to be discarded or equipment that needs to be repaired. Brisse says BSC even found a way to work the rounding into its normal routine so that it wouldn’t have to charge the hospital for that service.
BSC’s rounding then turned into an innovative “4-work” line. Now, when a Beaumont employee sees anything in the hospital that needs cleaning or repair, they dial 4-work on any hospital phone and report the issue. Hospital staffers liked the 4-work idea so well, it’s now also used to report telephone issues and information system issues. BSC then fields all those calls; if fixing the problem is not one of BSC’s responsibilities, they forward it to the proper hospital department. “It’s functioning like a help desk for anything in our environment that is not right,” explains Brisse. It places day-to-day “ownership” of hospital facilities into employees’ laps and gives them a simple no-hassle reporting mechanism.
Associate hospital director Brisse attributes the success of the innovative 4-work idea to BSC’s commitment to follow up on the issues reported. “If BSC didn’t get things handled quickly, the employees would not use it,” he says. “But because BSC has done such a wonderful job, our employees have truly embraced this idea; and we’ve all come to rely on this for keeping our hospital in top shape.”
Lifecycle costing analysis is one of the functions for which BSC is responsible. We’ve asked them to be our watchdog and help us make better decisions,” states Brisse. The service provider now advises on the selection of building materials that will provide the best value to the hospital. BSC analyzed flooring products for new facilities and recommended a material that had a slightly higher “first cost” but much lower ongoing maintenance costs. The recommended flooring did not require periodic refinishing, which was costly and took badly needed patient rooms offline for significant periods of time. Beaumont now uses BSC’s lifecycle costing analysis to select products to be incorporated into its building standards.
Whether it’s operational savings, maintenance savings or replacement savings, BSC serves as an example to Beaumont Hospital as a “smarter way to do business,” according to Brisse.
Biomedical engineering is another business process now under the umbrella of BSC’s staff and expertise. Traditionally, this includes functions such as maintenance of medical equipment, testing, and periodic preventive maintenance. BSC discovered that, under the guiding hand of the hospital department managers busy with radiology staffing, technology and patient care, cost savings opportunities in medical equipment original equipment manufacturer service contracts were not being pursued.
Realizing the hospital was not effectively managing its maintenance agreements, BSC created a governance process and now guides the effort in negotiations with medical equipment vendors. “They’ve become experts in service maintenance agreements to make sure we get maximum value for the contracts we sign and dollars we spend,” Brisse says. “They’ve taken this even further by hiring a couple of imaging equipment maintenance technicians onto the BSC team. When they do this maintenance work for us now, our costs change from a retail price to a wholesale price. “We knew they would be able to help us in this area, but we never anticipated how big the savings would become nor the ultimate value of the initiative.”
Innovation is alive and well at BSC, with staffers constantly exploring new ideas. They are testing an ultraviolet light that was placed near air handling system filters. BSC, Brisse reports, is installing the lights in Beaumont’s heating and air conditioning units and conducting a scientific research study to determine if this practice kills biological agents on filters, produces cleaner air and reduces maintenance costs in the hospital’s energy spend.
Performance Scorecard
Each hospital division reviews a balanced scorecard rating for BSC’s performance in key objectives for facilities management and facilities development on a quarterly basis (consistently, they’ve all been met). Besides objectives, the scorecard rates cost savings performance and customer satisfaction for both the facilities maintenance program and the construction projects.
If the scorecard reflects a level above the targeted 100 points, explains Brisse, Beaumont pays a bonus “all the way from the top of the BSC organization down through the staff level.” If they were to fall short of 100, their compensation would be reduced; so far, they consistently exceed the target. The metrics are reviewed all the way up through our executive committee, and Brisse and the joint hospitals’ governing body must sign off on the review.
“Everybody all along the way has to agree that the numbers actually reflect BSC’s performance,” says Brisse. “But we’ve never felt that their getting the incentive rewards were inappropriate – they’ve done a wonderful job. BSC is sort of the angel on our shoulder to make sure that we are always doing and getting the right thing and top value.”
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].