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Power Implant: Outsourcing… or Insourcing

Outsourcing Excellence Award – Best Partnership – Saint Vincent Catholic Medical Centers and Computer Sciences Corporation (CSC)

What struck David Campbell, chief executive officer of Saint Vincent Catholic Medical Centers (SVCMC), most about Computer Sciences Corporation’s (CSC) response to SVCMC’s Request for Proposal was that the outsourcer had taken time and effort to learn about the healthcare organization and align CSC’s capabilities with what SVCMC was trying to do. “They locked in on our strategic direction and mission,” he says. “They seemed to truly understand the nature of the issues we faced.”

Nothing could have been more important. In Campbell’s view, the healthcare organization was not just outsourcing. “It’s really more like insourcing in that you make the strategic partner part of your organization and indistinguishable from your other departments and employees,” he explains. “If a service provider can’t give you that sense that they are really going to buy into your mission and vision as part of providing their services, I don’t think you want them. You’re bringing somebody in — not taking somebody out.”

In With the New

Several major issues confronted the metropolitan New York-based integrated healthcare delivery system when the outsourcing agreement was signed in 2001. Established in a merger of three Catholic health systems in mid-2000, SVCMC serves as the academic medical center of New York Medical College and now includes eight hospitals, a large home care agency and four nursing homes. When Campbell arrived on the scene as the inaugural CEO, he assessed the challenges and opportunities in successfully merging the three healthcare systems. All three organizations had begun to fail financially, and “the state of affairs in IS was pretty sad,” he recalls. They had a “mish-mash” of IS systems and applications, including five different patient accounting and patient management systems and a limited HR payroll system. Materials management was absent, and there were shortcomings in applications across the systems. Turnover was high, and there were about 50 IS vacancies that were extremely difficult to fill.

Moreover, there was limited capital to invest in IS. Quickly determining that an adequate IS infrastructure could not be built rapidly with internal resources, he sought an external strategic partner that would bring a powerful array of resources and the expertise to support the implementation of necessary changes for the new system.

What ultimately emerged exceeded his and CSC’s expectations. It’s such a dynamic relationship that CSC’s account executive, Dr. Luis Taveras, is a bona fide member of SVCMC’s Leadership Council, participating in strategic discussions about overall operational direction. “He clearly wears a CSC hat,” says Campbell, “but he’s also bought into who and what we are and considers himself a side-by-side Saint Vincent person.”

Empowerment for Business Not as Usual

So far, their strategic partnership has empowered value beyond each of SVCMC’s original objectives. Campbell believes CSC’s flexibility is a key component of the partnership’s success. “Flexibility came through initially as a concern during our due diligence, so it has been really good to see them demonstrate flexibility and creativity over and over.”

CSC first purchased SVCMC’s assets, providing some capital infusion for the healthcare organization to re-invest in IS. But they went further than the contractual commitment for replacement of PCs and servers. The contract called for fulfillment of this objective to be spread over three years, but CSC accelerated the project — at no additional cost to SVCMC — and completed the technology refresh in just 12 months.

In a complex application project, implementing patient accounting, patient management and materials management with “go-live” pieces occurring over the New Year of 2003, CSC “didn’t bat an eye” in terms of providing additional resources and oversight to make sure the implementation went well. Campbell adds, “Those resources were not at our expense; they just consider that as part of the relationship.”

Truly, they look out for each other’s interests, and their partnership approach is paramount in addressing each situation they encounter.

When the September 11 attacks on the World Trade Center impacted business at SVCMC’s flagship hospital in Manhattan, CSC was there, working hand-in-hand to ensure the hospital could carryout its mission.

“The business disruption was really significant,” recalls Campbell. “It was everything — all the way from loss of water pressure; to adequacy of water; to telecommunications; to the victims of the WTC; and, subsequent to that, the ongoing disruption to inpatient volumes. It was massive. CSC stood with us through that time. Their staff left their offices and took on any and all duties required. We have pictures of the account exec helping to unload patients at our emergency room. There was no doubt about it — they were one of us.”

With their outsourcing partnership being a two-way street, the hospital also assisted CSC during the WTC disaster. The attacks geographically compromised the provider, so SVCMC delayed using some space it had leased, instead, allowing CSC to house some staff while its location was made habitable again.

Campbell says the disaster affected the hospital economically, in terms of cash flows, profit and loss. Strengthening their partnership throughout 2001 and 2002, CSC came forward with relief approaches and provided substantial cash flow relief for SVCMC. “They’ve definitely been there for us!” he exclaims.

Joint Ownership

When SVCMC turned to outsourcing and issued its RFP, it promised to be the same kind of partner it was asking the provider to be. Recognizing a strategic alliance is successful only when both parties are trying to ensure each other is successful, Campbell says SVCMC’s goal was to try to understand and align with what the provider was trying to do from its business strategy and values.

It happens on a day-to-day basis and hinges on flexibility. The CEO admits there’s a lot of pressure from all areas of the hospital for CSC to accomplish IS objectives. “But I think we’ve been good about managing that demand process and not putting that totally on CSC’s heads,” he adds. “Part of our approach is making sure our priorities are appropriately identified so that CSC has a chance of being successful in meeting our organization’s expectations.”

Facilitating that management of expectations got a supporting power boost when the CSC account exec created a tool to help the hospital track implementation of applications across the system and report on overall IS performance. They also created a fail-safe mechanism to resolve issues so that things won’t fester.

CSC continues looking for opportunities that will more effectively use the dollars that the hospital spends with CSC. SVCMC is looking into bringing another hospital into its system. That would result in more business for CSC and change the economic picture for both parties.

Their success catapults them into the limelight, with other organizations seeking understanding of how their strategic partnership works. Campbell says that, when asked, he advises organizations to choose a provider that can appreciate the challenge, strategy, direction and opportunity of the organization.

“We were buying more than widgets,” he states. “Our belief is that the service provider is an integral part of who and what we are. This is critical in whether or not we are able to be successful.”

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