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The Pros and Cons of Hiring Outside Consultants

October 16, 2023

BY MITCH MITCHELL
President/CEO, T. T. Mitchell Consulting, Inc., Liverpool, NY

To some, having an independent consultant write an article with the above title can look somewhat promotional or self-serving. Luckily, I’ve been on both sides of the equation, which means I have served as both an internal staffer and an outside expert. As a result, I can discuss openly and honestly the pros and cons of retaining the services of a consultant; at least I hope this article comes across that way.

A PERCEIVED NEED

Healthcare is one of the strangest businesses in the country. Whereas in every other industry there are people in positions of authority who know the inner workings of an organization, and there are multiple opportunities for these workers to move up the corporate ladder, that is not always the case in healthcare—especially as it pertains to most hospitals and almost all physician groups.

Most departments have one director and possibly some supervisors, who many times don’t know everything about their department because certain information has not been readily shared. The same goes for C-suite leaders, where in most facilities there is only one vice president responsible for a number of departments—in some cases, departments they might not know much about. That’s not blaming anyone; it’s telling the truth, as most of you already know.

In many cases, something comes up that is going to require the services of someone outside of the organization. I know that to be the case because, at two facilities I was employed at, neither had anyone on hand who knew anything about the charge master until I got there. At two of the facilities for which I provided consulting services, one hadn’t had anyone looking at the charge master for over three years; the other had given the duties to an accountant without any training and who was unable to do the job properly. The overall problem at both facilities was that there wasn’t anyone in the C-suite who knew how important a charge master was to their revenue and overall profitability; and, with the utmost humility, I was able to have a positive impact on them both.

WHO YOU GONNA CALL?

So, while bringing in the right consultant can be a real boon to a healthcare facility, there is also the downside of hiring the wrong consultant. Not only will such an individual fail to bring about the necessary improvements, he or she may actually leave the organization in worse shape than they found it. Often, these consultants will give advice based on analytics alone, rather than—I’m sorry to say—a bit of common sense.

CASES IN POINT

Many years ago, a major consulting firm that no longer exists went into a major hospital in California, charged a lot of money over the course of three years, and only fixed one of the problems that had been identified as needing correcting. Closer to home, I consulted in a different capacity at a hospital in Pennsylvania that had a previous consulting company use their analytics to decide that the billing department was overstaffed. This determination was made without taking into consideration that the facility had just installed a new computer system without sufficient IT staff, and the only person they had with a working knowledge of the new system had left two months after it was installed. That same consulting company was later sued by the hospital for failing to adequately address a single problem the hospital had been having over an extended period while charging a pretty penny for their so-called services.

I was also at two hospitals where the powers that be decided to have an independent consultant come in to evaluate my billing employees to see how proficient they were. At one of these facilities, the consultant found there to be 63 errors that needed to be addressed. When asked about it later by the chief financial officer (CFO), I pointed out how I’d requested more staff to address 62 of these issues; but, of course, that never happened. The second time the consultant found 21 problems, and the CFO talked to me about it, saying he knew about all 21 issues because I’d already told him about them, and he thought they were minimal. Both times, the only recommendation from the outside consultants was to involve more staff; that’s not helpful if that’s the only recommendation.

There are two major problems concerning all of the above stories. First, none of the hospitals had anyone on staff who knew anything about what needed to be corrected, as well as not having anyone who knew how to initiate those same corrections. Second, which is probably the biggest problem, hospital administrators are very private when it comes to needing some outside help, which means they rarely discuss these types of issues with other facilities within the area.

THE DECIDING FACTORS

I’ve highlighted some of the problems. Now it’s time to present some ideas that should help facilities in deciding whether they need consultants or not, or at least some idea in how to evaluate them.

First, if you can afford it, hire a revenue cycle manager or vice president. Make sure this person understands billing, registration, charge master, the concept of diagnosis coding (this person doesn’t have to be certified as a coder, just knowledgeable about how the process works so as to be able to discuss issues with the HIM department) and the concept of corporate compliance. This person should also know how to help determine whether the processes are working well, be able to make suggestions as to improvements or otherwise help to determine that outside help might be needed. Someone with these skills would have the ability to figure out whether an independent consultant or a consulting company knows what they’re talking about and what they can offer to address issues that might be beyond the skills or time of the position.

Second, drop your pride and ask someone at your level at other facilities if they’ve ever worked with a consultant or consultant company, and see if they have any feedback about them, good or bad. Many different levels at healthcare facilities have employees who belong to organizations that have either quarterly or monthly meetings. You don’t have to tell anyone why you’re asking if you’re uncomfortable about that part, but it never hurts to ask the question in general terms.

Third, interview at least three consultants or companies before making a decision. Have a set of specific questions that center on the types of consulting you need (if you know what you need) and, if possible, the specific circumstances related to your issues, how they addressed them in previous jobs and what the outcomes were. Don’t forget to ask them if you can contact any of those other facilities to verify those accomplishments, whether you do it or not.

Fourth, hire someone based on the scope of your needs. If you have multiple needs, it makes sense hiring a larger firm rather than an independent consultant. (A larger firm might hire a team of independent consultants who’ll actually do the requisite work, but they’ll have already handled the vetting process for you.) If you only require one item to be addressed—like a charge master review—you only need one person to handle it. Going this route might cost less than having a large corporation handling the single issue. In today’s environment, many of these tasks can be performed remotely, which cuts down on costs drastically. (However, if the task also involves someone needing to see how the charge capture works in different departments, the consultant might need to make an in-person trip for at least a few days for a deeper evaluation.)

Fifth and last, don’t always hire the consultant or company that costs the least amount of money. If you perform your due diligence and you discover that the choice you’ve made ends up costing a bit more, go for it. Hospitals generate significant revenue; if someone’s going to help you add to that profitability over the long haul, don’t let the upfront cost keep you from hiring the best choice for your facility.

At the end of the day, hospitals will have to determine whether they have sufficient resources in house to address their biggest needs and most pressing challenges or should instead look to an outside consultant or consulting firm for solutions. While costs are a consideration, the ultimate goal is to ensure the long-term success of the hospital; and, sometimes, that means making the occasional investment in outside expertise.

Mitch Mitchell is President/CEO of T. T. Mitchell Consulting, Inc., based in the Syracuse, NY area and specializing in revenue cycle management, charge master, leadership and diversity for hospitals and other health care facilities. He’s been consulting for 19 years, with his biggest success helping one hospital increase their revenue $730 million in one year. He can be reached at mitchm@ttmitchellconsulting.com.

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