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Ask the Pro: Shared Services for Hospital Providers

Busting the "Mission: Impossible" myth

Question:

The economy may be showing signs of life, but for hospital systems, the cost crunch never ends – especially now that health care reform is here. Maybe shared services can help us to reduce headcount, but can it do anything else to help us address our financial challenges?

Answer:

One widespread myth that often distorts health care executives’ perceptions of shared services value is that one-time headcount reductions account for almost all of shared services’ potential benefits. While it’s true that economies of scale should reduce salary and benefit expenses, and an effective SSO should focus on process improvements that lead to substantial year-over-year increases in productivity, there are other tangible and intangible benefits that hospital systems are realizing, including:

  • Revenue Cycle - Increased revenue realization through a consolidated patient financial services
  • Accounts Payable – Increased interest income through more strategic disbursement strategy (timing your payments) and reduced supply expense by talking all appropriate discounts and rebates
  • Supply chain – Reduction in supply expense and purchased services expense through centralized purchasing function controlling rouge spend
  • HR – Reducing cost to hire and benefits administration
  • IT – Reduced vendor maintenance costs and tighter management of vendor proliferation

Furthermore, the myth that shared services only “works” for transactional, rules-based processes is just that – a myth. As reported by respondents to Deloitte’s 2009 Global Shared Services survey, a growing number of organizations are effectively using a shared model to deliver a variety of knowledge-based services such as business analytics, application enhancement and deployment, workforce analytics and spend analysis, among others.1

Finally, although cost reduction may be its most important initial goal, a shared services initiative can also deliver significant improvements in efficiency, quality, and business outcomes.2 In fact, the health care providers who participated in Deloitte’s 2009 survey were much more likely than their cross-industry peers to report a significant positive impact of shared services on enterprise growth and data visibility, and somewhat more likely to report a positive impact of shared services on service levels.

 

[1] “Shared services shines in challenging times: Insights from Deloitte’s 2009 global shared services survey,” Deloitte Development LLC, 2009, p. 7. Available online at http://www.deloitte.com/view/en_US/us/c9150b2253903210VgnVCM200000bb42f00aRCRD.htm.
[2] “Shared services shines in challenging times: Insights from Deloitte’s 2009 global shared services survey,” Deloitte Development LLC, 2009, pp. 5-6. Available online at http://www.deloitte.com/view/en_US/us/c9150b2253903210VgnVCM200000bb42f00aRCRD.htm.

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