Project Background
Over the past several years, the Healthcare Services industry has become extremely competitive, transitioning from what was once a predominantly indemnity market to the current managed care format. The current marketplace environment indicates that to be a leading provider in this industry you must provide quality services at the lowest cost. In addition, the information processing requirements have increased substantially, as has the number of parties involved in the delivery of and payment for health care services. Those providers who do not fit this model will lose market share and thus competitive strength.
Recognizing the challenges of this marketplace environment a major BlueCross B1ueShield embarked upon a strategy to deliver cost effective, flexible healthcare products and establish competitive benchmarks for all others to follow. A major component of this strategy is a focused re-engineering of its operational infrastructure and the applications system and technology services supporting it. In support of this re-engineering effort, BCBS intends to partner with best in class service companies who provide technology services at or below industry costs and at best in class service levels.
The BCBS asked the vendor to respond to an RFP with a proposal to provide the Services, Service Levels and pricing as outlined in the RFP.
Objectives
Establish a new pricing mechanism so that the company assured its expenditures on the Facilities Management Services will be at or below the industry average services of similar size, scope and volume. Assure that the Services are delivered in a way that:
- Enhances the Company’s ability to take advantage of new technology in order to improve its services and further reduce its costs:
- Enhances the current functionality of the Company’s systems and level of services thereby improving its internal systems support and member service;
- Enhances the Company’s competitive position from a cost basis;
- Minimizes any potential operating and financial risks to the Company relating to the
Services; - Does not unnecessarily increase the Company’s dependence on the Vendors costs, for Additional Services or for services after the termination of this arrangement;
- Provides support to transition to a managed care environment, and
- Minimizes the costs and effort of migration on from the Vendor termination of the agreement.
TBI’s Approach
After meeting with the senior executives at the client, TBI began a four-step project process.
First, TBI interviewed a representative sample of both the Client and Vendor managers to understand what the history and current business issues were in the existing outsourcing relationship. Second, TBI reviewed documents and files from prior project especially the “fair market survey” conducted by TBI.
Third, TBI wrote an RFP for the Vendor fore to respond to that effectively set the stage for the Company to become:
- A low cost provider of quality healthcare services products resulting in a reversal of the current trend in membership enrollments, while
- Facilitating the technology environment for cost effective re-engineering of its application systems and technology services, which will support its low cost provider role objectives?
Lastly, TBI and the client established the response timeline and checkpoints; TBI acted as a resource to the client in responding to RFP and proposal issues.
Successful Business Solutions
The client received:
- Well structured Request for Proposal
- Guidelines for service levels and performance goals as the basis of any new agreement
- Pricing templates for new outsourcing pricing structure
- A strategy for negotiating any new agreement was established
- A strong foundation for measuring, monitoring and managing any new agreement.
