45% Cost Savings: The Wins Of Outsourced Hr

Something had to change. Sloan Bentley knew that for sure.

Lutheran Life Communities hired Bentley as CEO to guide the company through the COVID-19 pandemic, and one of the challenges she faced was reducing agency staffing spend. In 2023, Lutheran Life (LuLife) spent $4.7 million on agency help across its portfolio, with a great deal of that staffing going to the company’s 376-bed skilled nursing facility in Arlington Heights, Illinois.

That was an unsustainable cost and, in effect, an unsustainable staff. Bentley had to find a way to reduce that cost and increase staff retention while still bringing top care to residents.

“In the last four years, we’ve had to change our business model and strategy quite a bit,” Bentley said at LeadingAge 2024. “If I had a dollar for every time I had heard in the last four years, ‘We’ve always done it like that,’ I could re-finance the organization.”

What she did was examine five of LuLife’s top partnerships, leading to a dramatic re-shuffling, including outsourcing its HR.

In bringing HR services to ProCare HR, LuLife realized a number of benefits and learned four key lessons they are employing moving forward.

The challenges and considerations of outsourcing management

Bentley knows the first question that operators are likely to ask when thinking about outsourcing: “What’s in it for me?” Outsourcing can seem like a threat — until you see the benefits, such as cost savings or improved operations.

Those results won’t happen immediately, of course, and Bentley made note of 10 key challenges that operators must overcome when outsourcing:

1. Loss of control
2. Quality control
3. Integration issues
4. Cultural differences
5. Hidden costs
6. Communication barriers
7. Scope creep
8. Data security and privacy concerns
9. Dependence on external providers
10. Limited flexibility

She also cited four big areas of impact that outsourcing had on LuLife, and among the four, two were jointly tricky to navigate: team member morale and culture consistency.

“We started out with 1,100 team members, we’re down to 750, because when you outsource, some of those team members go to be employees or team members of the partner,” she said. “This is a big shift for an organization.”

How 5 outsourcing strategies drive 6 key outcomes

To navigate these challenges, LuLife follows a series of steps and strategies for outsourcing success, all backed by a bold proclamation that comes from true self-understanding.

“I always say: you don’t want to be our partner,” Bentley said. As she would tell prospective outsourcing partners: “We’re rather demanding. We’re very professional, but we’re intense.”

“That was my line and it was effective,” she said.

That self-understanding was central to LuLife’s outsourcing journey. They knew what they wanted and they knew how to get there.

“We knew that there would be an ROI or we wouldn’t entertain outsourcing at this time,” she said. “You may entertain outsourcing because of a lack of talent, you may entertain outsourcing because you don’t want to invest in the systems: the AI, etc., that other organizations might bring to your table. But for us, the mighty dollar was the driving force.”

To achieve that ROI, LuLife followed a series of strategies, including:

1. Each outsourcing function required a full business plan
2. Each prospective outsourcing partner had to undergo a full RFP process, with no playing favorites
3. LuLife focused on culture adaptation along with compliance
4. The scope of work had to be backed by KPIs
5. The partner had to undergo quarterly business reviews

A final key was that LuLife would champion one key partner in each outsourced partnership.

“This elevates the scope and breadth of the outsourced partner,” Bentley said. Those five partners were Thomas Cuisine for dining, Prelude for IT, Plante Moran for finance, Richter Associates for AP/AR and ProCareHR for HR.

All of this work has helped drive six key outcomes:

• $250,000 annual savings, with a projected $1 million savings on agency dues
• 95% new hire retention
• 49% reduction in open positions
• 60% reduction in clock creep
• Outsourcing costs are $2.4 million, or 45% lower than previous in-house staffing costs
• Overall reduction in corporate staff of $2.5 million and 38 FTEs

“ProCare has been a great partner, and we’re not an easy provider for them,” she said. “But we knew we had to make a decision and change rapidly because this impacted everyone at the organization. And they were at the table helping us with that integration plan.”

The 4 lessons learned from effective and efficient outsourcing

In the end, LuLife’s outsourcing journey has produced four key lessons:

1. Partner and vendor selection is critical
2. Both parties must adhere to business norms
3. No partner is perfect: work together to perfect deliverables
4. Human nature applies to the best partner too

“There have been days when there have been no openings in clinical. That’s amazing when you have 40 nurses on a shift. That’s incredible,” she said. “We’ve had some days when we have no agency in that building. That’s a miracle. I’m very grateful.”

This Views article is sponsored by Lutheran Life Communities. To learn more about outsourcing, visit them at lutheranlifecommunities.org.

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