Extend and Economize Through Co-Sourcing

Key Points:

• 2020 Survey: Most Compliance Officers co-source some services
• Co-sourcing is often less costly than doing tasks internally
• Eight tips for co-sourcing with vendors

Over the last 11 years of the Healthcare Compliance Benchmark Survey (2020 Survey), there has been evidence of increased reliance upon co-sourcing for vendor services and tools to assume some of the burdens that support core Compliance Office operations. This is understandable as Compliance Officers are being confronted with increasing external regulatory and internal demands, while most have only limited resources to meet all the challenges. Furthermore, it is becoming increasingly common to add responsibilities to Compliance Officers’ functions such as HIPAA privacy.

Co-sourcing involves using a third party on an ongoing basis to supplement limited staff resources by fulfilling part of the workload, while the Compliance Officer maintains control of the activity. This approach is recognized by the Department of Health and Human Services Office of Inspector General (OIG) as a useful solution for an organization that is limited in in-house compliance expertise and resources. Compliance Officers are increasingly employing this as a practical solution when confronted with the challenges of limited resources and/or staffing shortages. For the 2020 Survey, nearly three quarters of the respondents reported that their compliance program relies on using a hotline answering service. Six out of ten reported using a sanction-screening service with about one third also using a vendor for result resolution. Nearly six out of ten respondents reported using an E-learning tool vendor. One third reported using a vendor for policy and code development and automated compliance incident management software. Further, one quarter of respondents reported using vendors for claims reviews, specialized compliance/HIPAA investigations, measuring compliance program effectiveness, compliance risk assessments, and incident management. About one fifth of respondents reported using vendors for executive and board training, automated legislation and regulatory alerts, vendor compliance employee surveys, and arrangements reviews. About one in eight respondents reported using vendors for critical incident management, automated compliance audit software, on-call expert advisory services, and investigation training.

Co-sourcing Tips

1. Clearly define the duties, tasks, responsibilities, and methodologies for vendors to follow.
2. Ensure the agreement is flexible to expand on or contract levels of service as needed.
3. Look for providers that have industry-specific expertise.
4. Ensure the vendors being considered possess the needed skills and expertise.
5. Check experiences and seek references from the firm.
6. Ensure vendor agreements permit cancellation at any time when dissatisfied with services.
7. Bigger is not always better; smaller niche firms are often likely to be more responsive and provide better, less expensive services.
8. If planning to co-source for multiple tools and services, consider seeking discounts for a “bundling” arrangement.

Strategic Management compliance consultants have over 40 years of experience in providing research, analysis, and program support for privacy and security rule compliance. Call us at (703) 683-9600 or contact us online for a tailored assessment of your organization’s particular needs.