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January 31, 2005

What About Me? Change Management Priorities in Transcription Outsourcing
By Robert Lynch
For The Record
Vol. 17 No. 3 Page 30

Contemplating moving transcription services outside the organization? It’s a big decision that must be handled with sensitivity and diligence.

As any media type can tell you, no matter where or when changes are announced, every audience member is tuned in for the answer to the same question: What’s in it for me? Such personal concerns are probably most critical when an announcement is made that your department has been targeted for outsourcing.

Changing from an in-house transcription department to an outsourced service can be a truly daunting decision for chief financial officers (CFOs), HIM executives, and physicians. Not only is the decision a major change for the internal dynamics of the hospital, but it also means the hospital needs to establish a trusting partnership with a service organization that is part of a rapidly changing industry. Often the decision is clear from a financial perspective but uncomfortable to address from a personnel standpoint. What about the transcriptionists and supervisory staff that have been loyal employees for 10, 20, or even 30 years? What should they expect? What do they deserve?

Increasingly intense technological, regulatory, global economic, and social forces are motivating our industry to change whether we like it or not. The scope and pace of change in the transcription industry, however, presents a significant management challenge because of the simultaneous, unpredictable, and disruptive forces that have become the norm rather than the exception. The results are falling service prices, labor shortages, higher technology costs, HIPAA privacy and security concerns, and mergers and acquisitions—all motivating business managers to reevaluate their business models and competitive positions.

Ultimately, all these market pressures can be considered threats or opportunities. They can elicit fear and despair or mobilize the energy of good managers and transcription professionals who are determined to gain a competitive advantage. The chances of success depend on how one interprets the opportunities surrounding them and how they manage their choices. Even in these times of billing scandals and the mishandling of personal health information, such poor choices can be avoided with proper due diligence, especially when the significant cost and efficiency gains that occur when partnering with the right vendor are just as well-documented (although not as loudly hyped).

Managing Change
My professional career began in a Total Quality Management (TQM) manufacturing environment. Our TQM activities involved training groups of factory employees to work together and identify problems in production processes or quality, collecting and sharing data, then applying a series of process improvement techniques to determine potential solutions for evaluation and implementation. As these interactive groups were formed and encouraged, the relationships between the supervisors and their employees inevitably shifted because for the TQM process to be successful, you need to reduce the direct control—and monopoly on expertise—away from the supervisors and technical staff.

But freeing up the initiative, capability, and self-direction of the frontline workers also unmasked the deeply held authoritarian values of many plant managers. Their resentment over their perceived decline in status was expressed in delays, avoidances, disinterest, back-pedaling, and half-hearted lip service for the objectives while finding endless excuses for inaction and discounting benefits while exaggerating costs.

A bit later in my career, I was brought in to consult for a Fortune 50 international cosmetics manufacturer that was considering outsourcing its tax department to a Big Five consultancy. A team of six from a tax department of roughly 50 full-time employees was assigned to identify which processes to outsource and the expected cost savings and qualitative benefits. The project was stalled because everyone assigned to the team was focused on making sure his or her box stayed on the organizational chart. In the end, we were able to deliver significant cost savings and efficiency improvements, but only after we had assured everyone on the team that they were guaranteed a position of equal or higher stature even if the decision to outsource resulted in the loss of their previous position.

Experiences like these combined with six years of running an outsourced transcription service have made me quite sensitive to how individual career anxieties need to be addressed when process improvement initiatives are being launched. Despite the old saying, “The only thing that’s constant is change,” all changes are inevitably filled with skepticism by those affected and rephrased in terms of “What’s in it for me?”—especially when those changes involve outsourcing.

Given that any decision to improve transcription through outsourcing will be met with resistance and skepticism, the following perspectives on managing such change to ensure success for all parties could prove most helpful. Can an outsourcing change deliver benefits for the transcriptionists, the end users of the medical records, and the healthcare organization? It can, if you begin by asking the right questions.

When to Change
When is the right time to pull the lever and implement an outsourcing decision? HIM departments typically prefer to implement significant changes that involve staff members, technology upgrades, and/or workflow scheme improvements when everything is caught up and operating as it should be (although many HIM directors might be hard-pressed to tell you the last time that was the case at their facility).

Even though it is much easier to win consensus for the need to change during a crisis, the decision to outsource should be made in anticipation of difficulties. Waiting for an insurmountable backlog, a crashed dictation system, irritated physicians, and the like only serve to rush any outsourcing decision, potentially causing the implementation to be rushed and the initial results poor. Outsourcing arrangements are long-term partnerships and should be entered with careful planning with the right partner after conducting appropriate vendor due diligence.

Granted, it can be difficult to energize your organization for an outsourcing change when the department workflow is operating under control. When communicated properly, however, you can use the opportunity to promote the what’s-in-it-for-me tangible benefits that drove your decision in the first place, such as the reduction in the bottom line for the CFO, new technology for physicians, and improved workflow for the HIM director.

On the other hand, if you need to change to bail yourself out of a crisis such as an exploding backlog, it is best to focus on a portion of your workflow with minimal variables that can be launched ahead of your main volume. By delivering quick and controlled relief, you build confidence in your outsourcing decision and assure the entire organization that the “pain of change” will be short-lived and the end of your internal crisis is in sight.

What Is the Optimum Scope and Pace of an Outsourcing Change?
Given the flood of recruiting incentives being offered lately, it is safe to say that there are no national outsourcing companies loaded with experienced, trained, and qualified transcriptionists who are just waiting to jump on large volumes of work (millions of annual lines) at a moment’s notice. Outsourcing arrangements need to provide a long-term benefit to both parties or the relationship will fail. An HIM department needs to commit to a certain department, work type, and/or estimated volumes so the service provider can plan for the production and staff accordingly.

In most acute care hospitals, a significant amount of interfacing, process flowcharting, and implementation support is required to launch a seamless workflow for the doctors. Accordingly, most larger transcription companies are less motivated to pursue partial outsourcing arrangements because of the up-front implementation expenses. These larger services historically target the larger sites while the smaller services—often with less sophisticated or customizable technology—target and serve the smaller sites or limited overflow accounts.

Regardless of the account size, most transcription service providers schedule their acute care implementation cycles over 30 to 45 days from contract signature, with the final week used to validate connectivity and testing. In any case, a detailed implementation plan should be developed and communicated to the hospital’s key personnel. Explicit milestones should be clearly defined, with specific responsibilities for both hospital staff and the service provider openly reviewed during the implementation progress meetings.

What Cost Factors Should Be Considered?
It is important to establish that a decision to change is not an indictment of previous decisions or actions. It is difficult for people to accept (let alone promote) change when they have been a part of creating the conditions that are now causing the need for another change.

An HIM director who has been working hard at recruiting and training internal staff could understandably be resistant to considering outsourcing. Another common pushback reaction is to focus on “sunk” costs before committing to an outsourcing decision. Conventional thoughts such as, “But we just bought that system!” prevail when considering an outsourcing decision. On the other hand, sunk costs by definition will never be refunded.

The only costs that should be considered when deciding whether to outsource are pending costs. What are the annual support fees on equipment and software? What are the expected upgrade costs? What are the direct labor and benefit costs? Are there floor space charges assigned to the department? Will these costs disappear in an outsourced solution?

Avoiding progress because of sunk costs is like trying to justify a bad decision today because something else was the best option available at an earlier time. Once you can convince those who are emotionally tied to the existing investments that you appreciate their previous contribution but now need their help in advancing to the next level, you can focus on what will be spent and the organization’s competitive future.

Which Service Provider Should We Select?
Once a decision to outsource has been reached and the scope of the change is defined, selecting the right service partner is the next most critical choice. Because transcription outsourcing arrangements are highly interactive and long-term, they require the hospital and transcription service provider to share an understanding of expectations, a strategy and methodology for day-to-day issue resolution, and a commitment to the program’s success. The ability of the service provider to deliver consistent, long-term results in similar-size hospitals is also a key factor to consider.

When moving from a direct employee arrangement to an outsourcing solution, you will want to know whether the selected agency will agree to offer job opportunities to staff members. Will they hire everyone (or anyone)? Will the transcriptionists need to take a test before qualifying? How does the service providers’ wage-and-benefit package compare with what you were offering? How successful have they been in recruiting and retaining frontline employees at other facilities? Are they a reputable company? All these factors can have a huge impact on how your outsourcing decision is received throughout the organization and the type of ongoing expenses and liabilities you should prepare for during transition.

Of course, finding the proper combination of price, quality, and service will always be paramount when comparing outsourced transcription service providers. Validate your impressions through thorough reference checks and a quick browse through some of the transcription-specific chat rooms. Such research can often shed light on any differences between a service provider’s sales and marketing pitches and its operational expertise.

Whom Do We Tell and When?
A common mistake is for hospital administrators to believe that they should not tell the transcriptionists until the last possible moment. It is true that the management team needs to reach a certain point in the decision process before notifying the transcriptionists. Specifically, they should be able to answer several questions: Will the transcriptionists still have a job? If so, how much will they be paid? What are the benefits? What needs to be included in the severance package?

There is not a transcription company in the United States that could not immediately use a good hospital transcriptionist. If a service provider does not want your transcriptionists, it must be going offshore; otherwise, they would be interested in retaining your people since they are already familiar with the work and would be readily available to staff the account.

Depending on how your hospital compensates transcriptionists and how the selected service provider compensates its employees, some may indeed make less money. But depending on a number of variables, others could have an opportunity to make more money and enjoy additional benefits such as working from home, more variety, and better career advancement opportunities.

Managing the reaction to the change by those people who show up on Monday to learn “we’ve got a new plan” is perhaps the greatest challenge of the entire change process. These people have not been involved in the decision-making process and will have a deep psychological reaction to the decision. If these reactions are not anticipated and managed, it is fair to expect that the change will be needlessly painful and perhaps even unsuccessful.

Transcriptionists should be offered an opportunity to understand the reason for any outsourcing decision, discuss their options, and be provided with an incentive to ensure that the transition goes smoothly. Severance pay should be offered and it should be tied to specific performance needs such as ensuring that all work is off the old system or staying with the hospital until a certain date. If the service provider contracting with the hospital does not offer the transcriptionists positions, the hospital should be prepared to provide its employees with placement help to connect them with other service providers or hospitals, which will most likely be thrilled to have the opportunity to hire experienced, qualified transcriptionists.

Who Should Manage the Change?
Service providers need a change agent in the hospital to effectively implement an off-site solution. Change agents always need the ability to get all people affected by the project involved and ensure their support and commitment. This role requires a high degree of organizational competency and soft skills, which could also be referred to as emotional intelligence. This includes the ability to communicate, understand, and take into account the opinions and doubts of others. Change agents should know the process well and be able to provide the service provider with the required information regarding workflow and quality expectations. A change agent should also be provided with the same what’s-in-it-for-me assurances (such as an elevated position, salary, or bonus) that he or she can look forward to once the change has occurred.

The change agent needs the unconditional support of the Champion. The Champion is typically the CFO, CEO, or other executive who has the organizational clout to help the change agent through the difficult periods. The Champion doesn’t necessarily need to know the details of the process flow and timing decisions, but he or she must be committed to the change and offer support in the fight against internal obstacles, such as commanding the time and attention of the information technology department and human resources or addressing physician objections.

How Should We Implement the Change?
Much of the success of an outsourcing decision is based on the service provider gaining good information prior to the implementation. Information such as volume, work types, templates, routing requirements, and the like are all critical to a successful implementation. Since hospitals can be large, complex, and full of processes that are undocumented and misunderstood, it is always a good idea to pilot certain volumes, departments, or work types prior to a full transition. Piloting and testing are crucial to ensuring that the service provider has all the correct information and that if important details were overlooked, at least their effect is isolated until the process can be corrected. It is much harder for a service provider to fix problems on the run than it is to learn about requirements in advance and conduct proper testing prior to complete implementation.

Summary
Transcription outsourcing decisions are serious changes that can deliver significant cost and efficiency benefits when managed properly. When things don’t go as planned, the struggles and difficulties that need to be overcome can almost always be traced back to when the plan was communicated, to whom, and how the individual messages were received. Change may be constant, but managing change effectively needs to start with a sensitivity for managing people through change. The surest path to organizational success is to motivate all parties involved through positive personal options.

In the end, the change management process involved in transcription outsourcing is a shared responsibility between the service provider and the hospital management staff. If everyone pays as much attention to the transcriptionists as they do the bottom line, the odds of a successful transition increase.

— Robert Lynch is the president and chief operating officer of CyMed, Inc.

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