Reducing Costs Through Outsourced Security

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ODS HealTHcaRe SecuRiTy Special RepORT

Reducing costs Through

Outsourced Security

ODS Security SOlutiOnS

Headquartered in Richmond, Virginia • Toll Free: 1.888.221.0802 ODS-security.com

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one thing is indisputable – healthcare providers are consistently looking for

ways to do more with less.

Lowering costs through efficiencies and scale, lowering the price, and making it up

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.

Healthcare providers face increased pressure to reduce costs while maintaining or increasing qual-ity 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 com-mercial 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 chal-lenging environment.

HiStoricAl coSt StrAtegieS

Some hospitals resort to clinical layoffs and reduc-tions in services to cut costs. This may be a neces-sary adjustment, or it could be shortsighted. Layoffs may result in fewer healthcare services with long-term negative community perceptions and implica-tions.

Hospitals have also historically leveraged exter-nal 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-man-agement strategy.

Hospitals often operate multiple locations and each facility has different practices. in this situa-tion, outsourcing partners standardize and con-solidate functions across all locations resulting in efficiency and cost-savings. Strong partnerships bring major cost reductions through decreased administration and overhead, among other as-pects of security.

Outsourced security ensures that services are de-livered 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.

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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 actu-ally 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 signifi-cant opportunity for costs savings that ensue with outsourcing. And the potential for waste reduc-tion, 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 special-ized focus on safety, security, and patient engage-ment improves quality and increases patient/visi-tor 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 secu-rity 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 solu-tions will increase quality and decrease costs.

Outsourcing for hospitals:

1. Allows the hospital to focus on core competen-cies

2. Decreases costs and increases security function-ality

3. Improves quality of security services and patient/ visitor engagement

4. Engages industry expertise and knowledge that is often lacking

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 ef-fectively estimate and project potential cost savings with outsourcing, it’s essential to understand all as-sociated costs. Some costs are not readily apparent for a department since they are cloaked in adminis-tration and other budgets.

There are three (3) primary categories and subcat-egories of costs involved in the delivery of health-care 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 ac-counting for costs.

“ i concluded that managing a

propri-etary security function made no more

sense than having a large in-house legal

department to staff and manage.”

ceO, ODS client

ODS 2

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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exAmple 1:

cost Savings achieved at

Rural Health System

Rural health system comprised of 5 hospitals totaling 594 licensed beds 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.

total cost Savings

Health System $1,345,922

ODS $1,176,763 or 13% less

Annual Savings $169,159 cAtegOry 1 – Human Assets

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)

13%

Savings

$1,238,248

$1,082,622

cAtegOry 1

cAtegOry 1 – Human Assets

■ Direct wages and associated taxes

■ Benefit packages (health, dental, eye, disability) ■ Paid 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

■ Human resources’ time allocation for hiring/

recruiting/payroll/benefit administration

■ Human resources’ time allocation for employee

engagement (disciplinary, guidance)

■ Information technology

■ Improved efficiencies from management

exper-tise and industry best practices

The examples provided illustrate the potential sav-ings 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 sum-mary 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 op-portunity to decrease costs and increase quality through outsourced security. Delivering security so-lutions in the healthcare environment requires spe-cial expertise and a thorough understanding of the regulatory environment and compliance require-ments. It is essential to outsource to a healthcare-specific security provider who understands patient engagement strategies and customer service. ODS ■ 3

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, manage-ment, recruitmanage-ment, training, evaluation, benefits, human resource allocation, information technology, and other services are eliminated/reduced with con-tracted 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

cAtegOry 2 $26,919 $0 cAtegOry 3 $80,756 $23,535

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exAmple 2:

cost Savings achieved at

large urban Healthcare System

High population health system with five (5) hospitals, more than 1,700 licensed 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) stand-alone emergency care centers.

total cost Savings

ODS $3,851,447 or 21%

Annual Savings $1,023,803 cAtegOry 1 – Human Assets

ODS $3,543,332

ODS $77,028 (to system)

ODS $0 (to system)

exAmple 3:

cost Savings achieved at

Single Rural Hospital

Single Rural Hospital that comprises a 146-bed facility that provides a full range of medical services — from outpa-tient surgery, radiology and nuclear medicine - to cardiopulmonary and pediatrics.

total cost Savings

ODS $320,729 or 9%

Annual Savings $31,721 cAtegOry 1 – Human Assets

ODS $295,070

ODS $4,811 (to system)

ODS $0 (to system)

21%

Savings Savings

9%

ODS 4 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 al-ready 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 on-board as part of the team.

The brief assessment provided will help you con-duct 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 va-cant 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. $4,485,230 $3,543,332 cAtegOry 1 cAtegOry 2 $89,704 $0 cAtegOry 3 $292,515 $77,028 $324,254 $295,070 cAtegOry 1 cAtegOry 2 $26,919 $0 cAtegOry 3 $21,147 $4,811

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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 $

HeAltHcAre Security ServiceS – coSt evAluAtion

Preliminary Review of Some Costs Typically Unaccounted for in Security Not Intended as an Exhaustive Cost Review

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

al-legiance 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. Lon-gevity 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 se-curity department is the first step in making the decision.

ODS ■ 5

MergerS AnD AcquiSitiOnS

Hospital mergers and acquisitions have

risen 51 percent from 2010 to 2013. The

affordable care act (aca) has

acceler-ated the consolidation movement which

is expected to grow momentum over the

next five years. The blending of

orga-nizations is an excellent opportunity to

evaluate the often hidden cost savings

of integrating or keeping systems

sepa-rate. 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.

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“ 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

secu-rity. Some of those costs were assigned

to the security department, while

others were charged elsewhere in our

general ledger. ”

ceO, ODS client

ODS 6

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. Out-sourcing 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 (pa-tient surges, special events, natural disasters, and other)

■ Adaptation of proven security and process

im-provement 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 of national security industry best

practices

■ Experience in nationally tested principles for

healthcare security

■ Deployment of proprietary technology for

real-time alerts, monitoring, tracking, reporting

■ Expert disaster planning and recovery expertise

concluSionS

Hospitals are facing unprecedented challenges in delivery of higher quality clinical services at lower costs. The uncertainty of accountable care organi-zations, health insurance exchanges, and a sluggish economy continue to drive healthcare reimburse-ments and patient volumes down for the foresee-able future. Consumer-driven healthcare, regulatory requirements, and patient engagement expecta-tions put extreme financial and performance pres-sure on healthcare providers.

Fortunately, there are effective cost-cutting mea-sures available to healthcare providers regardless of hospital size, geography, and complexity. As part of cost-cutting initiatives, outsourced healthcare se-curity solutions can produce positive results to the bottom line. Outsourcing makes it possible for hos-pitals to center on core competencies and deliver clinical services that focus squarely on the patient- leaving the business of security and management to healthcare security experts.”

ODS Security Solutions understands the challenges within the evolving healthcare environment. We as-sist the C-suite and other decision-makers in making cost-effective decisions. These decisions focus on security solutions that demonstrate ROI and sup-port positive patient engagement results.

Our depth and breadth of healthcare security expe-rience 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 maxi-mizing 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 compre-hensive 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 de-rived from outsourced healthcare security solutions - and leave the rest to the security experts.

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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 pro-viding 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