Why Full Service Is the Smart Financial Move

Transitioning support staff to your service provider’s payroll might be the best move—for the long-term benefit of your hospital and your employees.

The Right Time

The decision to outsource management of nonclinical departments has many obvious and compelling arguments. These services are outside the core competency of the hospital of providing clinical care to patients. It provides external resources beyond the reach of in-house managers. It brings in specialized expertise to deliver better productivity and quality.

Still, even healthcare organizations that have embraced outsourced management may be reluctant to have hourly associates become employees of an outside company. No one wants hardworking associates to be mistreated or to lose their connection with the hospital and its mission.

However, especially in challenging economic times, transitioning hourly staff to the outside provider’s payroll can improve operations and the bottom line, as long as the transition is handled responsibly. Employees must be treated with respect and fairness to preserve morale, maintain strong operations and customer service, and ensure they remain supportive. If properly handled, this “full service” option, in which both management and hourly associates are on the service provider’s payroll, has several positive outcomes.

Address Skyrocketing Fringe Costs

The primary financial benefit results from addressing a problem hospital administration may not even recognize. The cost of employee benefits is rising at an alarming pace, and, as a percentage of income, fringe costs are extraordinarily high for support services workers. The problem is often masked because, at many hospitals, benefits costs for all hospital employees are aggregated into one pool, and the overall hospital fringe rate appears reasonable. The article “On the Fringe of the Healthcare Crisis” from the November 2007 issue of Celebrations provides an in-depth discussion of this topic.

Eliminate Workers’ Compensation Risk

Support services workers have physically demanding jobs, and the risk of injury is relatively high. By transitioning these employees to outside payroll, the cost of insuring this risk is transferred from the hospital to the service provider. Crothall Services Group has a dedicated Safety division, responsible for training associates on job-specific safety protocols. Through safety training and diligence in addressing claims, Crothall can minimize days out of work.

Focus Human Resources

Support services departments demand greater human resources overhead. The hospital’s HR department may get overburdened handling open support services positions and other issues, such as labor relations. With the healthcare industry’s current shortage of skilled nurses, HR better serves the hospital by concentrating on clinical positions. Outsourcing the support services staff moves the burden of staffing to the contracted service provider. Crothall’s dedicated HR can focus on maintaining a fully staffed department, ensuring consistently high service quality.

Improve Productivity

While administrators may worry that outsourcing will create contention between the department and the rest of the hospital, it is also important to consider the relationship between the department’s management with its hourly staff. While cohesion throughout the hospital is vital, having all department employees on the “same team” improves their internal relationship and results in better performance. In fact, Crothall’s analysis shows that its full service Environmental Services operations are on average 10% more productive than those in which only management is on Crothall payroll.

Expand Employees’ Opportunities for Advancement

A support services employee has limited options for career advancement within an individual hospital. However, at a company that specializes in providing support services, employees can receive specific job training, cross training, and promotions. Crothall’s most successful managers have spent their careers in support services, most climbing up the ranks from on-site support staff. For example, this year’s Terry Batchelor Award winner (one of Crothall’s highest honors), is Letitia Bean Johnson, a successful Director who started her career twelve years ago as a housekeeper. With over 700 hospital clients, there are opportunities for associates to advance and to move to another area of the country if desired.

Smooth Transition

At Cardinal Hill Healthcare in Lexington, KY, VP of Corporate Systems Laban Miller made the decision to outsource Environmental Services to Crothall in early 2005. Hourly staff was retained on hospital payroll and had the option to transfer to another department if they wished. Any future department vacancies would be hired by Crothall, with the goal being a full service solution through gradual attrition. Miller believed the transition was smooth, but after two years, he decided to accelerate the process. The hospital and Crothall agreed to keep employees whole by grandfathering their wages.

Miller states, “From my experience, transitioning the staff made things so much simpler. There are financial savings, but more importantly, it makes the department’s operations much more streamlined.” He personally announced the decision and emphasized the benefits to the associates, especially their ability for career advancement. Miller was proud to learn that within one week of the conversion, one of the employees was promoted to a management position at a nearby hospital served by Crothall. He continues to believe the decision was right for the hospital as well as the employees.

At a time when hospitals must make tough calls to preserve their financial well-being, full service may be the right decision. Crothall recommends that any transition be considerate of current employees to maintain good will and preserve operational effectiveness. A transition that grandfathers wages and benefits takes longer to generate substantial financial savings, but once it is complete, most administrators wish they had started sooner.