CS outsourcing: what it entails, when it makes sense

Staff shortages, budget cuts, instrumentation challenges, outdated equipment and ineffective interdepartmental relationships are all-too-common occurrences for many central service departments.

Individually, each element can have a negative impact on quality, outcomes and operating efficiencies. Combined, they can wreak havoc on morale, increase turnaround time, damage a hospital's reputation with physicians and patients, and in some cases, make administrators question whether they should scrap the majority of the sterile processing department's responsibilities and hand their problems over to an outsourcing company instead.

Although the desire to ditch core CS duties may appear logical on the surface, industry experts agree that such a move may not always be in a facility's best interest. And interestingly enough, CS departments that are rife with problems and system breakdowns may, in fact, be the worst candidates for outsourcing of wide-range sterile processing functions, they noted.

"There is a place for outsourcing where sterile processing is concerned, but it's a big step that should not be taken without carefully considering the unique needs of the facility," said Natalie Lind, educational director for the International Association of Healthcare Central Service Materiel Management and central processing department manager for Saint Cloud Hospital, Saint Cloud, MN. "I can see outsourcing working well in some instances and not so well in others, which is why it's so important to facilities to evaluate and fully understand their options."

In the realm of CS, those options are many. Although no clear-cut studies exist to identify with accuracy the prevalence of the practice, some estimate that approximately 12% of facilities are outsourcing at least some departmental functions. Such services can run the gamut front interim or long-term management and staffing to partial or complete an- or offsite maintenance of surgical instrumentation and equipment processing. Specialized staff development and training solutions, and comprehensive consulting services geared toward process improvement are other oft-sought solutions.

"There's often the misconception that outsourcing means providing services only from a remote location and requires that central processing departments relinquish all control to the outsourcing company. But that isn't the case," explained Ray Taurasi, director of business development, Case Medical Inc., Ridgefield, NJ. The truth, he said, is that outsourcing services should be carefully tailored to allow CS departments to focus their attention and resources on what they do best.

"A good outsourcing agreement is based on a partnership that improves skills and proficiency. It's not about giving up control," he said. "Outsourcing is really a strategic action of utilizing outside resources to perform activities handled by internal staff and resources."

Committing to change

Before a hospital should even consider outsourcing, it must first determine what it aims to accomplish doing so. Although such a move may seem like common sense, administrators often make the mistake of failing to adequately assess their situations, pinpoint problem areas, and commit to process improvement efforts from the inside out--instead, believing an outsourcing company will be the one-stop solution to all their problems.

Kevin Schimelfenig, vice president of sales and marketing for SterilTek Inc., Mentor, OH, said he often sees two types of facilities looking to become involved in outsourcing: those whose management really wants to perform the due diligence and be committed to the best healthcare business solution, and those whose management is facing so many problems that they just want to let someone else come in so they no longer have to handle the process.

"The challenge with the second type is that their problems won't likely go away simply because they are outsourcing them," he noted. "We get calls where hospitals are looking for a quick fix and we will change their focus by asking, 'Why are you really looking to outsource.'"

There's also the question surrounding economics. If departmental expenses (i.e., capital purchases, supplies, staffing, inventory, asset management and per procedure/tray costs) aren't clearly understood, it will be difficult for a facility to determine what it can expect to gain by outsourcing. Only after these questions are carefully addressed can an effective outsourcing partnership--or alternative solution be established.

Roadmap for success

Although it is possible for hospitals to perform their own assessments, many would agree that the task can prove daunting, which may lead the facility to further delay improvement efforts. In light of that challenge, numerous consultants and outsourcing firms offer comprehensive operational assessments to identify strengths and weaknesses and ultimately create a blueprint for improvement.

For Orlando, FL-based Surgical Services Inc., for example, consultative assessments are the first step in the outsourcing process.

"No one hospital is the same, so if you don't come in and identify the problems, how will you know what to address?" asked Mike Irwin, vice president of SSI's offsite operations. "We also need to see that there is the will to make fundamental change and that everyone is on board to make the necessary changes. If there's only lipservice and no commitment or [interdepartmental] buy-in, outsourcing won't be the answer. And we'll be upfront about that."

So will SterilTek. According to Schimelfenig, the company has turned down opportunities to outsource sterile processing functions because certain facilities were not good candidates for the service, but would be better served by education or focused process improvement efforts.

"We have the capability to work with these hospitals to determine problem areas and develop and implement a strategy that can help them manage their own departments more effectively and efficiently, if that is their best option," he said, adding that to better meet customer needs, SterilTek has expanded its product offering to cover clinical, financial and operational perspectives hospitals need to make a sound business decision.

Consulting firms are also ramping up their CS services. McFaul & Lyons Group, Horsham, PA, for example, offers a wide range of services, including operations assessment, operational planning, focused consulting and project management.

"Those involved in sterile processing have a difficult job--one that has become even more challenging due to more sophisticated instrumentation, strained [interdepartmental relationships] and increasing demands from the operating room," said Dave Kaczmarek, vice president of McFaul & Lyons. "Although the role of a consultant can be long-term, we typically aim to go in, straighten out their problems and inefficiencies, and provide them with a solid plan that allows them to continue operating more effectively and efficiently long after we leave."

Consultative services can be as simple as developing an orientation program or helping a department prepare for a survey, or they can be as extensive as department-wide planning and operational redesign. Depending on the duration and extent of the contract--which can run anywhere from two weeks to many months, hospitals can expect to spend anywhere from $10,000-$25,000, noted consultant Carol Reilly, senior vice president of ISH Inc., West Orange, NJ. The costs for full service outsourcing companies can be much higher, depending on the needs of the facility.

Bridging the gaps

While every healthcare organization will possess its own unique core competencies and experience a different set of problems, sources generally agreed that there are some specific circumstances where hospitals could greatly benefit from outsourcing.

A staffing crisis is one such example. Because personnel shortages are a relatively common occurrence, CS departments may at times find themselves in need of onsite interim management to oversee operations, prevent process breakdowns and help build a team of well-trained technicians. Staff outsourcing may also be an effective solution for facilities that are undergoing renovation and construction, and need experienced CS professionals wire can manage the sterile processing functions when equipment can't be accessed or operated.

"Interim management also creates an opportunity to educate and certify technicians, transform the staff's knowledge base and bring everyone up to speed on process improvement initiatives," explained Reilly, adding that ISH had recently taken on a six-month interim management project at a leading medical center in California, which created an opportunity to transform the department and certify approximately 100 people.

Staff experience can also help determine if outsourcing is an option worth exploring. If a hospital's CS technicians have limited experience dealing with high volumes of sophisticated instrumentation, the facility may choose to outsource those instruments to more qualified professionals and allow its staff to focus more on basic sets.

"On the other hand, if a hospital has a small cadre of experienced, talented people on staff, it may be a waste of their talent just having them manage more basic instrumentation," Irwin noted. "In those cases, it may make more sense to send basin sets and even Labor & Delivery trays offsite and let the CS department focus its attention on more complex instrumentation."

Hospitals that perform a high volume of surgical procedures may also be good outsourcing candidates, particularly if instrumentation inventory is limited and the caseload and procedural complexities are exceeding staff capabilities. According to Toby Lees, vice president of marketing and business development for Cardinal Hearth's Equipment Management Services, McGaw Park, IL, having a brand neutral, flexible onsite partner that can assume the risk of instrument ownership and maintenance may be the most cost-effective solution.

"Many hospitals are under-resourced and don't have adequate instrumentation to keep up with the demands of the OR," Lees said. "In some cases, we will perform onsite management for minimally invasive instruments, which tend to be more delicate and difficult to handle and maintain." In terms of strict economics, Lees said hospitals that perform more than 7,500 procedures per year and tackle complex and varied caseloads are among the best outsourcing candidates.

Cardinal Health offers a flexible asset management program whereby the company's experienced professionals recover designated instrument sets from the OR, clean and inspect them, and prepare them for the next case. Cardinal's asset management staff handles virtually every instrument management function other than sterilization.

Onsite or offsite operations?

When assessing outsourcing options, institutions often question whether to keep the CS function within the hospital or move it offsite. Although each facility will undoubtedly have different needs, sources generally agreed that the greatest benefits lie with an outsourcing provider that offers both onsite and offsite services.

The reason is simple: Move all instrumentation offsite and a hospital is entirely dependent upon an outside processing operation for delivering instruments on time--a risk that most healthcare organizations would rather not assume. At the same time, having an outsourcing firm that supplements instrumentation and manages the complex process entirely onsite may further exacerbate departmental problems by encroaching on already limited space.

"In my opinion, a mixed system is best," said Taurasi. "That way, hospitals can send routine instruments out and handle high-end, delicate instruments onsite, or vice versa. It isn't all or nothing."

Front a pure cash flow perspective, moving at least some CS functions offsite could prove lucrative, particularly if some of the department can be converted into revenue-generating space.

"An outsourcing strategy should consider the costs of offsite reprocessing as compared to the revenue gained by turning the vacated sterile processing area into revenue-generating OR or laboratory space, for example," explained Schimelfenig.

Reilly said it's not uncommon for a larger hospital to see a return on investment of more than half a million dollars in the first year and as much as $3 million within three years--savings that can be achieved by instrument standardization, improved product flow and efficiencies, lower repair and replacement costs, and a reduction in surgical case delays.

Despite the obvious potential for cost savings, hospitals should refrain from viewing outsourcing as a cost-cutting strategy.

"It's important to realize that outsourcing isn't about a quick fix or saving money," Schimelfenig said. "It's about increasing efficiencies that then allow hospitals to make more money."

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