Much has been said about health care workforce shortages when it comes to physicians, nurses, and other providers. But equally important are the shortages the non-clinical and shared services staff face.
Compensation leaders support the optimization of labor resources so clinicians, the organization, and its leaders can run at peak performance. In partnership with HR and business leaders, they identify positions to fill, develop precise job descriptions and determine compensation rates to attract top talent.
But what happens when leaders find themselves short of in-house compensation expertise and vital work falls behind?
Co-sourcing can provide just the help that’s needed.
What Co-Sourcing Is (and What It Isn’t)
Based on our broad research and discussion with clients, co-sourcing is an emerging concept within the health care industry. A number of hybrid co-sourcing models are gaining steam in the health care world.
What is clear is that health care systems are tapping into highly skilled external labor resources who partner with internal staff to ensure critical work gets done. This is different than just hiring consultants for discrete projects.
Co-sourcing partners are contracted as advisors with very specific expertise, and they can be embedded within an organization’s operating workflow for defined periods of time. Each organization can customize its arrangement to match specific operational needs, but partners are often allocated access to the client’s equipment and/or the partner’s infrastructure depending on the need to function as a true extension of the existing team.
The co-sourcing partner must understand the client’s operating ecosystem and how they may provide value from a people, process, and technology perspective.
What differentiates co-sourcing from insourcing and outsourcing? With insourcing, an organization’s internal staff typically adds to its existing workload to manage tasks without additional hires or third-party labor. However, this adds additional strain on existing staff and can further erode team performance, morale, and retention.
On the other end of the spectrum, under outsourcing, an organization hires outside resources to take on a set of defined tasks or an area of work, with very little or no collaboration with the internal team.
When executed well, co-sourcing is an advantageous blend of these two options in terms of staff support, cost, and operational effectiveness. The external partner brings their expertise and resources–and, ideally, deep and specialized industry knowledge–to collaborate with the internal team, allowing those team members to benefit from and collaborate with their partner while having the time to attend to their daily tasks.
With day-to-day work under control, managers and department leaders also have more time to devote to strategic initiatives.
To be clear, co-sourcing is not akin to engaging temporary administrative staff via an employment agency, as those arrangements often enlist junior-level staff and can necessitate a lengthy onboarding process. Co-sourcing partners are experts in their fields, requiring far less onboarding investment than bringing on a generalist.
The Value of Compensation Co-Sourcing
The world of health care and the workforce that drives it has permanently changed and will continue to transform, making it difficult to settle on a single operating model. It’s simply not practical to cope with ongoing compensation workforce shortages by continually replacing staff or increasing the workload of internal teams.
Co-sourcing, in addition to the efficiencies already mentioned, offers tangible and long-lasting benefits to teams and organizations, including:
- Increased Knowledge: When co-sourcing partners are truly embedded within a workgroup and treated like a member of the team, there is an opportunity to learn from and apply their industry experience. For example, a co-sourcing partner with keen market compensation expertise and perspective can impart that knowledge to the internal team, which can be invaluable–and, as a result, can increase functional credibility and make the team indispensable to the organization.
- Uninterrupted and Consistent Support of the Business: Compensation co-sourcing ensures internal compensation teams deliver consistent, quality service to support the business. Compensation teams are often under-resourced, like many other departments; the departure of just one team member can be crippling. With the addition of a co-sourcing resource, the team can still deliver with less of a discernible impact.
- Return on Investment: The financial investment of implementing co-sourcing can vary depending on organizational needs, such as the level of expertise/services required, technology needs, available compensation data sources, and the duration of the contract. What’s arguably most important, especially in a sector as critical as health care, is the return on that investment and the quality of service delivered to the organization.
Depending on the size of the system or hospital, a compensation team may field hundreds of requests per month. They must respond quickly and help colleagues make important and informed business decisions.
Because compensation is very individualized, it can elicit strong emotions when issues arise, and managers need to know that their teams are equipped to deliver consistent, accurate information.
This is where compensation leaders are increasingly recognizing the ROI of a reliable co-sourcing partner. By reinforcing the strength of the internal team, leaders are ensuring the delivery of timely, precise, and high-quality support, with the added benefit of bolstering the reputation of the team to internal stakeholders.
How to Make Co-Sourcing a Success
As with any business initiative, care must be taken to ensure that any co-sourcing partner is set up for success and can deliver on expectations. Engaging a co-sourcing partner, handing them a laptop, and inviting them to one introductory meeting without understanding the existing people, processes, and tools before integrating them into the team and work is a recipe for disappointment.
Think of the co-sourcing partner as part of the staff: include them in the regular communication cadence, grant access to shared files, and prioritize inclusion for conversations and meetings where the team’s work is shaped.
Along with fully embedding a co-sourcing partner, it is equally important to preserve the new team once that partner is on board. Rotating in a new resource every few weeks only fosters a lack of continuity and hampers service delivery. Co-sourcing arrangements are typically longer-term; it is common for organizations to establish a relationship of a year or more with the same partner.
It’s also important to establish a clear service agreement so each co-sourcing partner understands what is being asked of them and any metrics or measurements of performance. Leaders may want to define specific expectations for meeting deadlines, responding to e-mails, being available during the workday, etc.
It is the organization’s responsibility to hold their partners accountable as they would any internal work group member.
The Right Timing and Tasks
Organizations, especially when understaffed, sometimes struggle to define the events or milestones that point to an opportunity to add a co-sourcing resource. Some key moments are obvious—when there has been an impactful staff turnover or when the organization is struggling to manage through long-term ongoing labor shortages, for example.
Organizational change triggers may be less obvious, such as an upcoming merger, acquisition, expansion, or major leadership change. Other signs may be a notable organizational redesign, a shift in services or an unexpected crisis—in other words, a significant transformation that touches everyone in the organization.
Co-sourcing can help teams navigate and steer the larger workforce through major events like these.
When uninterrupted hospital and health system operations and patient care are the priority, a co-sourcing resource can fill critical gaps in areas such as compensation planning, market insights and analysis, and job description research and drafting. Co-sourcing these functions reduces the burden on operational, HR and compensation teams, so internal teams can focus on managing the business and delivering strategic business imperatives.
A Solution Is in Reach
The sweeping, industry-wide changes health care systems have been grappling with for some time cannot be reversed—but health care compensation leaders can still deliver on quality of work, timeliness, and responsiveness.
Co-sourcing offers a solution to pressing challenges as well as immediate resources and benefits that teams, organizations and, ultimately, patients will enjoy well into the future.
Christina Miller is the co-sourcing leader and a consulting manager in SullivanCotter’s Employee Workforce Practice. With more than 15 years of experience in compensation consulting and leadership roles within the health care industry and beyond, Christina has partnered with both for-profit and not-for-profit organizations nationwide to lead complex pay, performance and benefits redesign initiatives. Having led executive, provider, and broad-based employee compensation strategy, she has unique insight into developing and implementing programs for the entire health care workforce.
Cathy Loose is the employee workforce practice leader of SullivanCotter’s Employee Workforce Practice. For over 25 years, Cathy has advised employers in health care, higher education, and global markets on all areas of broad-based workforce compensation. She has also served as a Compensation Consultant to companies in the biotech, pharma, hi-tech, and life science industries.