ODS Healthcare Security Special Report
Reducing Costs Through Outsourced Security
One thing is indisputable – healthcare providers are consistently looking for ways to do more with less.
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owering costs through efficiencies and scale, lowering the price, and making it up L on volume is not a new concept. But in the world of medical services and related ancillary services, it’s an extremely difficult challenge - when the health and lives of people are at stake.
Historical Cost Strategies Some hospitals resort to clinical layoffs and reductions in services to cut costs. This may be a necessary adjustment, or it could be shortsighted. Layoffs may result in fewer healthcare services with longterm negative community perceptions and implications. Hospitals have also historically leveraged external resources and services to help manage costs. Services including laundry, food services, grounds maintenance, and housekeeping are typically at the top of the outsourced list. But what are they missing in their cost-savings strategy? Hospitals are missing the critical role played by healthcare security experts. Outsourcing security services to a specially trained healthcare security provider has proven to be an effective cost-management strategy. Healthcare providers face increased pressure to reduce costs while maintaining or increasing quality of care. But what’s driving this current focus on decreased costs? There are multiple issues impacting healthcare costs, including: 1. Increased consumer (patient) involvement and financial responsibility” 2. Current economic environment 3. Reduced payments from government and commercial payers 4. Shifts in how care is organized, delivered, and reimbursed 5. Affordable Care Act (ACA) and participation in Medicare Shared Savings Program (MSSP) The combination of these factors creates a financial dilemma for healthcare providers in an already challenging environment.
Hospitals often operate multiple locations and each facility has different practices. In this situation, outsourcing partners standardize and consolidate functions across all locations resulting in efficiency and cost-savings. Strong partnerships bring major cost reductions through decreased administration and overhead, among other aspects of security. Outsourced security ensures that services are delivered by an organization focused on security as its core competency. The result? Higher levels of security and safety for hospitals. And what better time to make this decision than now when measures like patient safety and patient satisfaction are being tied directly to Medicare reimbursement under the ACA? Dedicated security experts work with hospital staff to positively impact those measures and greatly enhance the healthcare environment and satisfaction scores.
“ I concluded that managing a proprietary security function made no more sense than having a large in-house legal department to staff and manage.” CEO, ODS Client
Call to Action This ODS Healthcare Security Special Report clearly defines how small, medium, and large healthcare systems can save between 8-21% by outsourcing healthcare security services. These savings fall directly to the bottom line where they can be better used for direct patient care and active patient engagement. This report is a call to action for healthcare leaders seeking cost-reduction opportunities that can actually improve quality. Consideration of outsourcing healthcare security services seldom makes it to the C-suite where decisions are made. That’s probably due to the fact that many people do not recognize the significant opportunity for costs savings that ensue with outsourcing. And the potential for waste reduction, while improving the overall collaboration and synergy between hospital clinical teams and the security department, is not clear. A highly experienced security team with a specialized focus on safety, security, and patient engagement improves quality and increases patient/visitor satisfaction. In addition to demonstrated cost savings, there are indirect savings attributed to risk mitigation and improved quality. Some security costs are directly attributed to security budgets. Others are often included in another budget line, or even reflected in global budgets and savings. Decision-makers who take time to itemize the appropriate costs and assign financial impact will quickly recognize that outsourced security solutions will increase quality and decrease costs. Outsourcing for hospitals:
5. Provides reporting and data to evaluate results, identify needed improvements, and continually improve security solutions 6. Allows hospitals and providers to focus on caring for patients
Savings Opportunities Making a decision about outsourcing healthcare security services requires a careful evaluation and review of all costs involved with the services. To effectively estimate and project potential cost savings with outsourcing, it’s essential to understand all associated costs. Some costs are not readily apparent for a department since they are cloaked in administration and other budgets. There are three (3) primary categories and subcategories of costs involved in the delivery of healthcare security services. Evaluating these categories enables a CFO or other management leader to determine the overall opportunity for savings with outsourcing. The categories are defined below at a high level and serve as a preliminary basis for accounting for costs.
1. Allows the hospital to focus on core competencies 2. Decreases costs and increases security functionality 3. Improves quality of security services and patient/ visitor engagement 4. Engages industry expertise and knowledge that is often lacking
57% of CFO respondents said managing labor costs has been the most difficult operational issue during the past year. “The State of Healthcare Finance: 9 Major Survey Findings From Hospital CFO’s’: Becker’s Hospital Review, April 2014.
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Category 1 – Human Assets ■ Direct
wages and associated taxes
■ Benefit ■ Paid
packages (health, dental, eye, disability)
annual leave/pension
■ Department
overtime cost
Category 2 – Expenses and Expenditures ■ Uniforms ■ Initial
and ongoing training (security staff, Handle With Care, IAHSS)
■ Specialized
training (Active Shooter, emergency response, de-escalation techniques, and more
■ Training
for managers of security departments
■ Equipment
(vehicles, vests, flashlights)
■ Occupational
health on-boarding (vaccinations and fit testing)
■
Worker’s compensation
■ Pre-employment
background checks
■ Personal
background checks
■ Property
taxes on equipment
Category 3 – Ancillary Services ■ Human
resources’ time allocation for hiring/ recruiting/payroll/benefit administration resources’ time allocation for employee engagement (disciplinary, guidance)
Example 1: Cost Savings Achieved at Rural Health System Rural health system comprised of 5 hospitals totaling 594 licensed beds Savings and five (5) urgent care centers. More than 5,300 employees and over 30,000 inpatient admissions and more than 140,000 emergency room visits annually.
13%
Total Cost Savings Health System ODS Annual Savings $169,159
Category 1 – Human Assets Health System $1,238,248 ODS $1,082,622 Category 2 – Expenses & Expenditures • Health System $80,756 • ODS $23,535 (to system) Category 3 – Ancillary Services Health System $26,919 ODS $0 (to system)
■ Human ■
$1,345,922 $1,176,763 or 13% less
$1,238,248
Category 1
$1,082,622
Information technology
■ Improved
efficiencies from management expertise and industry best practices
The examples provided illustrate the potential savings from an outsourced security solution. These are examples of actual cost savings projected/achieved at three (3) health systems of varying complexities across multiple geographic regions. A brief summary of each facility is provided for clarity on scope and nature of the services provided.
Assessing Your Options and Costs Outsourcing security can reduce costs by 8-21%. But costs alone cannot be the deciding factor when comparing outsourced security solutions. Every hospital and healthcare provider has an opportunity to decrease costs and increase quality through outsourced security. Delivering security solutions in the healthcare environment requires special expertise and a thorough understanding of the regulatory environment and compliance requirements. It is essential to outsource to a healthcarespecific security provider who understands patient engagement strategies and customer service.
Category 2
Category 3
$80,756 $23,535
$26,919 $0
Assessing costs of outsourced security should include a thorough evaluation of labor costs, total annual expenses, and the overall quality of service delivery. The high costs of administration, management, recruitment, training, evaluation, benefits, human resource allocation, information technology, and other services are eliminated/reduced with contracted security. In addition to decreased costs, contracted security firms bring expertise in regulatory requirements, vulnerability assessments and remediation, security audits, disaster planning and recovery, and more. They also offer the added benefit of redeploying
Example 2: Cost Savings Achieved at Large Urban Healthcare System
Example 3: Cost Savings Achieved at Single Rural Hospital
High population health system with five (5) hospitals, more than 1,700 licensed Savings beds, and 16,000 employees. System encompasses the full array of health services, including a Level 1 Trauma Center, Level IV neonatal intensive care unit, and five (5) standalone emergency care centers.
Single Rural Hospital that comprises a 146-bed facility that provides a full Savings range of medical services — from outpatient surgery, radiology and nuclear medicine - to cardiopulmonary and pediatrics.
21%
Total Cost Savings Health System ODS
$4,875,250 $3,851,447 or 21%
Category 1 – Human Assets Health System $4,485,230 ODS $3,543,332 Category 2 – Expenses & Expenditures Health System $292,515 ODS $77,028 (to system) Category 3 – Ancillary Services Health System $89,704 ODS $0 (to system)
Category 2
Category 3
Total Cost Savings Health System ODS
$352,450 $320,729 or 9%
Annual Savings $31,721 Category 1 – Human Assets Health System $324,254 ODS $295,070
Annual Savings $1,023,803
$4,485,230
Category 1
9%
$3,543,332
$292,515 $77,028
$89,704 $0
security staff from other locations during disaster events, patient surges, or other periods with high patient/visitor volumes. Another consideration of the outsourced provider is the employment of your most effective security staff currently delivering services. These officers already know your facility and culture. Although they are required to complete all applicable screening, training, and competency evaluations, they are able to quickly assimilate into the new security structure. This is a significant value-add when the new vendor is willing to bring existing qualified security staff onboard as part of the team.
Category 2 – Expenses & Expenditures Health System $21,147 ODS $4,811 (to system) Category 3 – Ancillary Services Health System $26,919 ODS $0 (to system)
$324,254
Category 1
Category 2
Category 3
$295,070
$21,147 $4,811
$26,919 $0
The brief assessment provided will help you conduct a preliminary review of your security costs. It is provided as an abbreviated assessment but does not capture all related costs. Some organizations also find their annualized costs artificially low due to a security risk where leaders leave security post vacant when staff are using vacation or sick days. This strategy creates a positive financial variance while also posing increased risk to the organization. The brief assessment is used to demonstrate some known and unknown costs associated with security services. A more thorough evaluation is needed to draw any significant conclusions and cost savings projections.
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Healthcare Security Services – Cost Evaluation Preliminary Review of Some Costs Typically Unaccounted for in Security Not Intended as an Exhaustive Cost Review Activity
Annualized Cost
Category 1 – Human Assets 1.
Total salaries for officers, management, leadership
2.
Annualized cost of benefits (health, dental, disability, annualized leave, overtime costs)
$
3.
Security officer hours utilized as sitters (behavioral health, forensics patients, other), transport and other non-traditional security services (switchboard)
4.
Pension/Retirement Category 2 – Expenses & Expenditures
5.
Worker’s compensation
6.
Vehicle costs annually (if applicable) including gas, insurance, taxes, maintenance
7.
Annualized costs of recruitment and pre-employment screening (TB, drug, fitness, vaccinations, other)
8.
Annualized cost of training officers/leaders, certification costs
9.
Annualized cost of uniforms
10.
Recruitment/Pre-employment Costs (advertising, onboarding, background checks, licensure, other) Category 3 – Ancillary Services
11.
Liability insurance rates
12.
Annualized cost of equipment: Radios, flashlights, batteries, IT, other TOTAL ANNUALized COSTS
There are key considerations other than costs when outsourcing security solutions. ■ You
must first choose a security provider you trust.
■ Security
providers should have no particular allegiance to companies that sell security products, but should ensure a thorough, unbiased review of options.
■ They
should align with your core values.
■ Choose
a security provider with a long track record of delivering high quality services. Longevity is a good measure of the provider’s ability to continuously deliver security solutions for the long-term.
■ Establishing
clear goals and accountabilities will help ensure the security provider is performing at or above expected levels.
■ And
as discussed earlier, your security provider should specialize in the healthcare industry.
But, evaluating the costs associated with the security department is the first step in making the decision.
$
Mergers and Acquisitions Hospital mergers and acquisitions have risen 51 percent from 2010 to 2013. The Affordable Care Act (ACA) has accelerated the consolidation movement which is expected to grow momentum over the next five years. The blending of organizations is an excellent opportunity to evaluate the often hidden cost savings of integrating or keeping systems separate. As the healthcare industry seeks to better manage costs, health systems look to reduce costs through economies of scale, including the implementation of shared services, and programmatic integration and consolidation. An expert with healthcare security knowledge can mine these economies of scale so they may be realized.
“ When we did a thorough review of our operating costs, we were impressed by how many costs would decline or be eliminated when we outsourced security. Some of those costs were assigned to the security department, while others were charged elsewhere in our general ledger. ” CEO, ODS Client
Beyond the Numbers It is essential to outsource to a healthcare-specific security provider. Delivering security solutions in the healthcare environment requires special expertise and a thorough understanding of the regulatory environment and compliance requirements. Outsourcing healthcare security solutions not only maximizes costs savings as quantified in the above examples, but delivers other savings opportunities as well. A highly experienced, healthcare-specific security provider maximizes your cost savings potential and improves the overall quality of the security department. This results in: ■ Industry-leading
expertise and leadership for depth and breadth of knowledge and experience
■ Flexibility
and redundant/additional resources during short- and long-term security needs (patient surges, special events, natural disasters, and other)
■ Adaptation
of proven security and process improvement strategies for customized solutions
■ Continuous,
professional security officer training
■ Regulatory
compliance and survey support (The Joint Commission, CMS, OSHA, and other)
■
Increased levels of safety and security
■ Greater
collaboration between hospital staff and security teams
■ Seamless
integration of security solutions throughout all hospital departments
■ Deployment
Conclusions Hospitals are facing unprecedented challenges in delivery of higher quality clinical services at lower costs. The uncertainty of accountable care organizations, health insurance exchanges, and a sluggish economy continue to drive healthcare reimbursements and patient volumes down for the foreseeable future. Consumer-driven healthcare, regulatory requirements, and patient engagement expectations put extreme financial and performance pressure on healthcare providers. Fortunately, there are effective cost-cutting measures available to healthcare providers regardless of hospital size, geography, and complexity. As part of cost-cutting initiatives, outsourced healthcare security solutions can produce positive results to the bottom line. Outsourcing makes it possible for hospitals to center on core competencies and deliver clinical services that focus squarely on the patientleaving the business of security and management to healthcare security experts.” ODS Security Solutions understands the challenges within the evolving healthcare environment. We assist the C-suite and other decision-makers in making cost-effective decisions. These decisions focus on security solutions that demonstrate ROI and support positive patient engagement results. Our depth and breadth of healthcare security experience enables us to deploy people, resources, and technology to effectively and efficiently manage security solutions. Strategic industry partnerships allow ODS to provide niche services while maximizing economies of scale and a highest level of security and excellence. For more information or to request an analysis of your security needs to project potential savings, contact us at 1.888.221.0802. We offer a comprehensive analysis tool for costs and solutions that will clearly demonstrate how you can save money and improve quality. Take advantage of the significant cost savings derived from outsourced healthcare security solutions - and leave the rest to the security experts.
of national security industry best
practices ■ Experience
in nationally tested principles for healthcare security
■ Deployment
of proprietary technology for realtime alerts, monitoring, tracking, reporting
■
Expert disaster planning and recovery expertise
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About ODS Security Solutions ODS is one of the most respected and highly recognized healthcare security providers in the country. Our executives and leadership team have more healthcare experience than any other security firm in the business. ODS has earned a reputation for the best combination of programs, people, and client outcomes in the industry. We focus on preemptive security solutions to avoid or defuse situations before they become events, so our client partners can focus on caring for patients. ODS values our clients and we have 100% retention rate of our healthcare security clients. We are committed to providing a safe place for employees to work, physicians to practice, clinical staff to perform, and patients to receive care. With a host of security solutions for small to large healthcare organizations, we don’t just keep your facilities safe – we make them alarmingly secure.
ODS Security Solutions Headquartered in Richmond, Virginia • Toll Free: 1.888.221.0802 ODS-security.com