Speaker 1: Kirk Kaiser
Speaker 2: Mickey Eberts
Speaker 3: Danielle Young
Speaker 4: Art Huber
Speaker 1 (00:00):
Glad you could join us on FM After Hours, the ultimate podcast for all things facility management. We’re here to take you on a journey into the ever-changing world of fm. Don’t forget to check out our gracious sponsor, remediate your trusted partner and fire and life safety compliance. And with that, let’s dive in.
Speaker 2 (00:19):
Hey, welcome back to the FM after hours show. I’m one of the hosts, Mickey Eberts, and with me I have Art Huber and Danielle Young, and I’m going to take a second to introduce Danielle. I was nervous in the last podcast and I just gave you her name. So her nickname around the office is Goddess Danielle because she’s all knowing and she’s everywhere. So we have her here because she’s got to keep us in line and plus she’s got a great sense of humor.
Speaker 3 (00:46):
Yeah, I’ve got them all fooled.
Speaker 2 (00:48):
That’s right. Anything you’d like to add?
Speaker 3 (00:51):
No, I’m just really excited to be part of this and I’m really excited to hear you two fight it out over insourcing and outsourcing today. So it should be a fun episode. Yeah,
Speaker 2 (01:00):
We need one of those boxer bells. Ding
Speaker 3 (01:02):
Ding, ding, ding d.
Speaker 2 (01:03):
Exactly. And then obviously Kirk Kaiser’s back with us as well. I’ll start out with saying I’d like to thank Remediate as our host of our podcast, and as always, remediate is the answer to all of your life safety needs. And our last podcast, we finished a two-part series related to the joint commission and how you can prepare and do the best you can for that survey. Today we’re going to talk about a hotly contested topic around insourcing versus outsourcing and healthcare facilities management. With that, I’ll turn it over to Kurt Kaiser and Danielle Young to help us facilitate the discussion
Speaker 3 (01:41):
Round one.
Speaker 1 (01:43):
Exactly. Alright, well first I’d like to know just how you guys both look at insourcing and outsourcing. Is it simply just labor? Is it beyond that or just give me just a minute, just sort of how you view insourcing versus outsourcing the topic.
Speaker 4 (02:00):
Right. Well, from my perspective, it can be anything you do or need done in a facility. And my experience in the world of insourcing versus outsourcing over my career, I have been able to insource every part of what facilities does with one exception because it’s a totally unionized and regulated, and that is elevator maintenance. Other than elevator maintenance, we have found methods and by which you could insource every part of facilities.
Speaker 1 (02:30):
So by insource you just mean simply doing it all in-house,
Speaker 4 (02:33):
Doing it all in-house with labor, and then even the extent of in creating some of the supplies or supply chain management of things that you need for the facility with being able to house and store and the things you need to do the job in a better way than having to wait for orders to come in and things. So it goes pretty wide depending on how aggressive you want to be and how much you can sell that to your administration at a hospital.
Speaker 1 (03:02):
Okay. So do it all.
Speaker 4 (03:04):
Yep.
Speaker 1 (03:05):
Okay.
Speaker 4 (03:05):
Mickey, how do you look at it?
Speaker 2 (03:06):
Yeah, this is probably the only thing I’m going to agree with him on and is the definition of insource. I mean, I think it’s accurate and to me it’s how much risk do you want to take on?
Speaker 1 (03:18):
And we will get into some of those factors as to what, but so outsourcing, we’re not just talking labor though. It could be
Speaker 2 (03:24):
Materials,
Speaker 1 (03:24):
Technical services, materials, whatever.
Speaker 2 (03:28):
Consulting. Yeah,
Speaker 1 (03:29):
Doesn’t matter. Yeah, I mean I think people generally gravitate towards just labor, but it doesn’t just have to be that. Right,
Speaker 4 (03:36):
Right. It’s trying to keep, well, for example, you might be, I guess referring to is in one of the facilities where we insourced the life safety plans that we talked about at the prior session where we, in-store, we had a team of AutoCAD specialists that did all the updates to our drawings and they were engineers, so we had those on staff as well. We had a mechanical, electrical and an architect on our staff.
Speaker 2 (03:59):
Well, and I guess to your point though, yeah, it is probably, you’re talking about labor, right? You are looking at though, can you buy materials cheaper than if you bought ’em through, if you just contracted something out? And with that contract came materials and labor. The example I was going to use is when we insource courier, because we actually went and bought vehicles and we bought software and we hired people. The way I look at insourcing, and this is why I think it’s so difficult, is you’re running a business, right?
Speaker 1 (04:35):
So I’m going to poke the bear a little bit. Go for it. So basically you’re saying you can do everything better than everybody else.
Speaker 4 (04:46):
Your goal
Speaker 1 (04:46):
Is to pull everything
Speaker 4 (04:47):
Else. I’m not saying better. I’m saying equal to or better. So equal to or better. So you don’t need to do it better than your outsourcing partners. You just need to do it as needed or as required by whatever you need done. It’s not necessarily a better thing. Now, I would argue many times it can be better, and I could give you all the reasons why that happens, but you can do it better. You can also do it worse.
Speaker 1 (05:13):
But in general, you said the goal is to pull everything in was your goal and to do it all. So if you’re a car, you’re going to build the car, you’re going to drive the car, you’re going to service the car, you’re going to do everything around the car and you’re going to rely on nobody else for the car.
Speaker 2 (05:29):
Well, I don’t want to, is that you answered, then I’ll answer. I think we’re going to agree
Speaker 1 (05:34):
We’re getting to you next,
Speaker 2 (05:36):
Then
Speaker 1 (05:36):
I have a point
Speaker 3 (05:37):
To bring up as well.
Speaker 1 (05:37):
Yeah, no, but in general, is that the mindset? That’s
Speaker 4 (05:40):
Basically when you say build the car, that might not be building the car because you’d buy the car, but then you take care of the car and you maintain the car. For example, let’s get to a hospital or to a facility department. We aren’t building HVAC units. We buy those or we may engineer them, then buy them and then maintain them all within house resources.
Speaker 3 (06:04):
Okay.
Speaker 2 (06:05):
Good clarification. Yeah.
Speaker 3 (06:07):
So I come from a very extensive background of healthcare, so CNA nurse, all of that. And we all know that healthcare has issues with staffing. So if you want to transition into doing something internally such as the repairs and replacements with in-house, how do you justify that when you may not have full staff and you need to pull external?
Speaker 2 (06:28):
Well, it’s, hold that for just a second. Getting to the meat of it. Okay. Sorry. That’s good. That’s a great question. I love that question. You’re getting to the middle. I want to add something to the sort of high level definition and whether you’re trying to do everything and whether you’re trying to do it better. And I mentioned running a business. I run a business now and have for a while now and actually have done so successfully. And one of the things that, a skill that I had that I didn’t realize I had was creating performance and understanding risk and making decisions on whether you’re going to do something or not. So an example, at one point we insourced forklift maintenance, but there was a piece of the forklift maintenance that didn’t make sense to do it because of the analysis that we did. A big thing, no, I’m going to stop there. I don’t want to start my argument. So I think that’s key, and I’m going to keep referring to it in the discussion,
Speaker 1 (07:29):
And I think that’s good. I mean for this, let’s get a little confrontational.
Speaker 2 (07:33):
Good, good.
Speaker 1 (07:34):
I mean, I would almost prefer you almost took that point of view, the outsourcing point of view and especially,
Speaker 2 (07:40):
And
Speaker 1 (07:41):
I’m having been a CEO O of a company that does outsourcing you a different, I mean, you obviously have both views of having worked in the environment and oops, get my hand down having worked in the environment and everything, I need the duck now. But let’s have you take more of the outsourcing point of view, right? I think it’ll make for a more fruitful discussion. So in the last time you had said, Hey, look, with unlimited resources, unlimited capital, unlimited, which I think we can all say facilities never has that, never has that. So then if you look at it from a resource constrained thing, which I think where you were heading a little bit down, how do you look and say, all right, man, these are the items that I will then look to insource, right? Where do you start
Speaker 4 (08:37):
Then that, I mean, the question is in, I answered in source everything, but it’s not all at once. I mean, I think that should be obvious, but maybe it wasn’t. Well, where
Speaker 1 (08:47):
Do you start?
Speaker 4 (08:47):
Well, you start at the most simple, the things that you can do with the least amount of training, the amount of labor issues that you might have, expertise. So you start at the very bottom, and that’s how you build the program because let’s just say you start with a simple task of plumbing because many times a facilities department might not have a plumber that can snake a drain. They just don’t. So every time a drain plugs up, they call a plumber in. So you are doing that analysis Mickey was talking about with your finances,
(09:27):
And you pull the data, and this is where I think Mickey was going, is that skillset is very important to this exercise or this attempt to outsource or insource your outsource functions. So you look at the data first and say, okay, I spend, and I’m going to make it numbers because I have no idea what any given place might be using, but I spend a hundred thousand dollars on outsource plumbers. And you look at it and say, well, if I hired a plumber at, I’m going make up numbers. I don’t remember what salaries are anymore, but at $40,000 a year, I just gained 60,000.
Speaker 1 (10:00):
Yeah. Assuming you’re not grossing ’em up and everything that goes along with hiring and training and everything else that
Speaker 4 (10:07):
Goes along, but you within the hospital, you already have an HR department, you have those things and you will have an HR department, and this is where you have to be savvy. And they’ll say, well, if you hire somebody that’s going to cost us more to maintain that person, it doesn’t, you add one person here or there, it does not add people to their department.
Speaker 1 (10:27):
You’re going to make a lot of people mad
Speaker 4 (10:28):
Listening this right now. That’s correct. And that’s exactly where it happens because you’ll have a, let’s call it a rule of thumb that a HR person uses or a finance person uses. Every department has their own. You add a person costs this much in our facility for hr, it costs this much for finance to manage their payroll or whatever. The fact is, they manage a whole bunch of people and the increase of 500 might cause them to hire somebody new in HR or whatever that number is.
Speaker 2 (11:00):
But we had that in our proforma proforma.
Speaker 4 (11:04):
We build everything you possibly can to make those departments see that you’ve accommodated their concerns because you had to sell this.
Speaker 2 (11:12):
But it goes much deeper than that. Say you get past that argument, now you got to go recruit a plumber, and a plumber today is probably 70 grand and your pay scale, first of all, you don’t have a plumber, so you don’t have a pay scale. So now you’ve got to go get your HR department to go out and bring back that’s not educated at all in plumbing, mechanical. So they’re going to go out and they’re going to bring back a, what is it called? They do market study, right? They’re going to bring back a market study. First
Speaker 4 (11:46):
You have to write a job description, you
Speaker 2 (11:47):
Got to write a job description.
Speaker 4 (11:47):
You got to do a salary study.
Speaker 2 (11:49):
Then they’re going to tell you, well, okay, we’re going to pay your plumber 18 bucks an hour, which by the way, translates to about 40 grand. So then how are you going to recruit a plumber that’s 70 grand, even if you have it in your performance, and as he said, you showed you spent 200 grand for plumbing, now you just want to pay 70 plus benefits. So let’s say with all your materials, you’re 120 grand in everything, 120 grand at risk. So you’re saving the organization $80,000. You’re blowing that organization’s minds. Now I’m going to piss people off. People think that people that run hospitals, run businesses, hospitals are how far behind 20, 30 years behind
Speaker 4 (12:32):
In those approaches. Absolutely. I mean, they’re behind in those approaches because they’ve been running it as medicine, and that is not a standard business now, it’s changed a lot in the last 10, 15 years with all of the changes in regulations of the Accountable Care Act, all the things that Medicare, Medicaid push onto hospitals to document and to, I mean, there’s so much going on. We could take 50 episodes to talk about all that stuff that’s going on around you and facilities that you need to know because that’s the struggles you have to go through and understand that you’re going to be up against whatever you do. And that’s not just because you’re going to insource. You got to do that for every job you have, regardless if it’s an, so the answer to Mickey then should be you should outsource the entire department. It’s too much work. You should just hire Johnson Controls to come in and say, here’s the department, you guys run it for me. Whatever the dollars are, you got to do it because we can’t do it because it’s too much work. So that’s kind of where everybody wants to go in. Well, if I can’t do it now, Danielle’s question. Okay, so you put the Johnson, I’ll use Johnson Controls because they’re an outsourcing company and
Speaker 3 (13:51):
Check out remediate. They’re our sponsor.
Speaker 4 (13:53):
Yeah, check out remediate. Oh, great. They do this kind of work for hospital all across many industries. And I have done work with them in the past as a facilities director, not as a outsource. By the way, you mentioned Mickey ran a outsourcing company. I also did, I mean, I was part of his company. So I’ve been on both sides of this equation and know the ins and outs of both sides of the, what’s going on in the two industries. So anyway, the point is, okay, if you do the math and you say you’re going to outsource to, some company will say somebody another than Johnson Controls, it’s going to cost you this much. Well, there’s labor in there, there’s benefits in there. There’s all those same costs that you say you have to run all those people through their systems, all those things exist. And then there’s a markup, there’s profit, overhead, all those things on top of that that you’re going to pay.
Speaker 1 (14:53):
And profit is every company in America, the hospital has profit,
Speaker 4 (14:56):
But as a facilities department, I’m not making a profit.
Speaker 1 (15:00):
But the assumption to be made that it’s completely apples, apples insourcing versus outsourcing, I don’t think is necessarily correct. So
Speaker 4 (15:08):
For example, oh, I agree a hundred percent.
Speaker 1 (15:09):
Yeah.
Speaker 4 (15:10):
Way
Speaker 1 (15:10):
Worse. We’ll take for example, your plumber example, right? Yep. Even if you can save, let’s just say 20, 30%, right? Well, is that plumber going to be there 24 7, 365 or you have to? They are. So you’re never going to give them a minute off during
Speaker 4 (15:28):
No. Is your plumbing company there 33 65?
Speaker 1 (15:31):
Well, the point is that you can call the plumbing company and they might have 10 people to send depending on who’s working. Can’t call a plumber. That’s
Speaker 2 (15:38):
My point, is at home on his, even if all that works out financially. But let’s say, because my argument, and you and I have had hours of discussion around this. We operated in a closed environment when we had success doing this inside of a hospital, we had what I would consider a unique environment with our relationship that we built with the CFO, the trust that we had with the executive team, and we were there for an extended period of time. All of the things that we built at that system, they’re all gone. They’re not there anymore.
(16:17):
Once I left that system and then went to another organization that had at the time 160 hospitals around the country, the point of that organization was to copy what we did. We rolled that out two and a half years. I left in 2017. It’s all gone. Everything has fallen apart. They don’t insource moving. They don’t insource data drops, they don’t insource courier, they don’t insource life safety. It’s all gone. My point is, yes, you’re right. If you have all of the variables under control and you have the right people to manage it, yes, you can do it.
(17:03):
But that doesn’t happen very often. What I see constantly is I go in and again for disclosure, I am the CEO of remediate, so I don’t want to mislead people, but I also spent 20 years with you doing exactly what we’re talking about, and we had a closed loop. So today I go in and we say, we have customers that say, well, I insource it. And then I say, okay, well how about letting me go in my team, go in and just check your program? I don’t want to overstate it, but most of the time it’s a mess. Most of the time it’s a mess. So to you, sir.
Speaker 4 (17:47):
Okay, so I mean that’s not an argument against insourcing. I mean, the argument is that you’re making is that you can’t do it because, or you shouldn’t do it because when you leave, it’s going to stop being done by the next leader.
Speaker 2 (18:03):
I’m saying you should be very careful what you choose to try to do it with.
Speaker 4 (18:06):
Well, I agree with that, and that’s when you talk about how we did it with this organization. It was that very way that I started explaining to Kurt that we took the very low hanging fruit. First you save, and again, numbers don’t matter. You saved eight percentage. Sometimes it was way more than 10, 20%. Sometimes it was 50, 60, a hundred percent. And you took that money and you took it to the CFO and to the CEO and said, look what we’ve done. We’ve got this money that we’re now using to do something else. We didn’t say, here’s the money back. And this is why, because we talked earlier, you never have enough money. And if you take that money and keep building that program, you’re able to build that, call it internally or organically, right? You’re able to do it organically within the organization.
(19:00):
And yes, you do need people that are bought into it. I’m talking about on the team, and you have to do the training like you would for any member of the team. And I would tell you, being the same company on the outsource side, it was no different hiring people, training people. It’s same human beings. They’re not different human beings. They’re not like we find superhuman people on the outsourcing side that are, let’s use plumbing instead of remediate. But plumbing, they’re no different. They have the same stuff. They’re same mental capacities. You train them, they operate now, and you’re asking question 24, 7, whatever. We had people on pagers. What was in that equation that we talked about was on call, pay, callback, pay, all the things that we didn’t do it with closed eyes or some whim, right? It was look at all that data, and that’s why Mickey started the beginning.
(19:59):
You really have to have that acumen to be able to understand those things and pull it all in, not leave little parts out there and go. And I would use this as a, I love this example more than anything else as far as talking about insourcing versus outsourcing. Because one, the ones that killed me the most out of my career was biomed. Because you would have the companies come in that wanted to outsource your biomed and make up numbers basically to say how much by pulling the finances and basically saying, look at all the money you’re spending on biomed. And it wasn’t true, but the finance person on the other side that if I couldn’t make it, the argument would say, oh my God, yes, and you’re going to do it for 10% less. And then half the stuff was never being done by somebody internally, it was being done in the departments and they continued to do their own thing because they couldn’t wrestle that out of their hands.
(20:53):
Like I’m going to talk about in biomed, you got scopes, or we say, well, you’re spending all this money on biomed because it was defined that way in a financial, the ledger, it said scope maintenance. Well, that’s biomed. It goes in this bucket. And so the bucket got this big. I never had that much in my bucket. I had this much, but they said you had this much. So they took 10% off and said, we’re taking it over. So you have to have that acumen to have that build that right to the understanding of everything you’re doing
Speaker 2 (21:23):
And have, when you talk about medical equipment, there’s a huge amount of risk and strategies that you have to understand to offset. You might have to have insurance programs, you might have to have secondary coverages. And my point is, in my travels around the country, what I see facility leaders focused on is trying to cover the bare necessities of the equation. They’re beat down. They don’t have enough staff, they don’t have the acumen and more than one or two verticals inside of facilities. They don’t come from business backgrounds. They’re not used to doing that.
Speaker 4 (22:04):
Right. And I agree with all that. It doesn’t make it a better answer to say, well, just forget it.
Speaker 2 (22:12):
Well, it have to
Speaker 1 (22:12):
Be
Speaker 2 (22:14):
Executable
Speaker 1 (22:14):
Saying, just forget it. I think what he’s saying is, look, there are time and places where, whether it’s specialization of labor, whether it’s technology where a company that’s out there can go and purchase train staff for the ability to service a hundred companies. And if you still have to have the same knowledge base, if that hospital is going to take that on, they have to go get knowledgeable and train themselves up. So a great example would be what we typically see is that let’s take a door program. Someone’s going to insource a door program. The typical thing they do is they take a carpenter
(22:52):
And they go and they go put in and they say, you’re in charge of the door program and we’re going to save money because we’re now pulling this in and you’re going to go fix the doors and stuff. But the problem is, is that that person only has the skillset of being able to rehang a door, swing a door. They don’t necessarily have the knowledge of when is cross corridor latching and required, what happens when a door delaminates? What happens when all these different things that you encounter in a hospital, what does the codes and standards say about it? When is it required, when is it’s not? So it’s great if you can hang a door, if you can replace a door, but if you don’t know what’s wrong or what’s right in the beginning, so there’s that technical expertise and why you would want to go spend hundreds of hours training that person for that one task needs to be factored in the equation.
(23:43):
And the second thing is, is that that person that’s a carpenter is a carpenter because they’re good with their hands, right? That’s why they probably are in that trading profession to begin with. And then we’re going to go try to make them a technical expert over it. And then a second point to that is, is that you have to be highly organized. An average medium sized hospital has a thousand fire doors in it, and you have to record what’s going on for every single one of those doors, the 11 or 13 point inspection, what was wrong? You have to do the fixes and you have to have it all organized. And remember we talked about last week with the wall of binders, if that joint commission inspector comes in there and he looks and goes, pulls that binder off of the fight and it looks like second grade homework, now he’s going to queue in on that for your deal.
(24:31):
But in a lot of cases, it’s like taking one person and putting ’em over that when they only have one of the three required skill sets. Working with your hands is, but you have to first know what’s wrong and what’s right and how to apply it and where to apply it and spend all the time training that person. And the brutal reality is if you go make that person great, someone’s probably going to come in and hire ’em away anyway. And then trying to take someone that’s not typically someone that’s highly organized, not the trade that they got, and then turn them into that. And that’s sort of what we see over and over again when certain things get insourced is the full scope and breadth of it is not. All they’re looking at is, oh, I can take a cost piece and I’m looking just at the cost, not at the downstream effects of I’m going to fail my joint commission inspection. I’m going to make them more discouraged. I have all this time on documentation and all of those things. And so just looking at the cost piece, I think of a labor dollars per hour, just lose a sight of what the total objective is, which is to provide the safe environment to provide
Speaker 4 (25:37):
That. Well, that’s a great contractor explanation of what would happen at a hospital and this fear that they try to inject into the whole equation.
Speaker 5 (25:44):
Okay.
Speaker 4 (25:44):
Exactly. That’s what you do. So that they say, oh, I can’t do that because it’s way too hard. It’s not that hard. This is not rocket science.
Speaker 1 (25:52):
So you really is. You’re telling me if we went in and took a standard carpenter, they’re
Speaker 4 (25:56):
Going to know, no, I didn’t say. You said take a carpenter.
Speaker 1 (25:58):
Okay, who’s going to be in charge of the door program at MO
Speaker 4 (26:01):
Hospital? The director of facility is going to be in charge of that program and he’s going to develop a team of people. And here’s where again, you’re not going to start with doors,
Speaker 1 (26:09):
But we don’t see, we’re just taking doors right now. Finish. Okay,
Speaker 4 (26:12):
Go ahead. You’re not going to start with doors though.
Speaker 1 (26:13):
Okay.
Speaker 4 (26:15):
You’re going to go to a program, and I think this is where Mickey would say is the methodology we use is you start from the simple stuff and you move up. And by doing that, you’re creating resources constantly to build upon. And here’s where the most of the biggest problem you’re going to run into. The way we did it is if you’re a unionized shop. Because if we had, you wouldn’t believe the skill sets we built within. You had a maintenance mechanic, a carpenter, electrician, and they all did some of that stuff. There wasn’t one person that was, here’s the doors and go fix ’em all and maintain ’em all.
Speaker 1 (26:55):
So who did your doors out of curiosity?
Speaker 4 (26:58):
A group of people. There
Speaker 1 (27:00):
Wasn’t one person
Speaker 4 (27:00):
Responsible. There was a group of people that had various skills and they did the inspections because they had the, but if that one person got hired away, they were so good. He had five more that could do it, but they weren’t all carpenters or they all weren’t all electricians or they were multi-skilled individuals. We called them maintenance mechanics.
Speaker 2 (27:22):
We did all of that
Speaker 4 (27:24):
And
Speaker 2 (27:24):
It was fantastic.
Speaker 4 (27:25):
Lemme just finish. So you build from that so you can develop a team of people. You don’t just take one thing. And one of the big things we did in order to gain those skill sets amongst the people, and Mickey did this all the time, is let’s use remediate because there are sponsors. If we would go to mediate who was doing all our fire doors, if we were going to do that, go that far because it just depends on how much you can get to, I mean, I want to insource everything, but that’s just not realistic to think you can all the time unless you have that closed environment you talk about and you can build the skill sets and all that, but you want to keep moving in that direction, putting money back into the facility constantly that you don’t have today and you’re not getting everything done.
(28:09):
So you’re trying to get more and more of that money that you can put back into that facility to get more and more done. You don’t have enough. But what we would do with remediate, let’s say if we were going to try to start a door program and we’d say, listen, remediate, we’re going to be insourcing our doors soon, okay? We’re just letting you know we’re good partners. You’ve been our partner for 10 years or whatever, but we’re going to go that way. We can go with you. We not, and we’re going to count on your support once we go that way for door replacements, we’re not going that far or whatever. You’re giving them the story and say, but we want you to help us train our people or not. And we’ll just cut now and we, we’ll tell you we’re going and we’ll just use somebody else to get there.
(28:53):
And then they’ll be our support for door replacements, whatever, whatever. And 90% of the time, 99%, I don’t remember. They would say, okay, they knew what Mickey just told you that someday somebody knew would come in my place or his place and they say, gosh, this is too much for me. I don’t want to focus on this. Remediate it. You got it again. So those partners would be maintained. And of course, again, there was maybe an emergency situation that we, there’s all kinds of things that happen, hot floods and fires and all kinds of things where you need those resources again and they’d be happy to come in and work with us again on a given project or whatever, installation or whatever. Oops, sorry everybody. That’s how we approached it and all of our partners, and there were many that were prior service contractors and maintained service contractors and those that we never like the elevators I talked about that knew they were there forever. So that was the approach so that we didn’t alienate anybody or try not to, and then had the resources internally so we could continue to give back into the facility
Speaker 2 (29:59):
And out of respect. And by the way, I felt like I was a large driving force in that happening. It worked wonderfully. And not only did I, then I went to again the hospital system that 160 hospitals and rolled out programs all over the country when I left the organization that you and I worked for and I surveyed. So the first thing we did at that organization was went and did what we called a current state assessment of every organization and we dug into their finances. No other system in that 140 hospital system did anything close to what we’re doing. I don’t know. I surveyed a hundred, 150 hospitals as the joint commission. No other hospital system or hospital did what we did. Now I’m sure, I don’t know if we have anybody that listens other than our significant others right now. We’ll get there, we’ll get there. But one day somebody might listen to this damn thing or watch it and I’m sure there’s somebody out there and please call in and tell us I’m wrong and tell me your success story.
Speaker 1 (31:20):
Well, to expand upon what you’re saying, if we take fire doors, let’s just keep going down this path. Fire doors used to be done 100% insource by everybody. They did. Everybody did ’em.
Speaker 4 (31:32):
They didn’t do ’em
Speaker 1 (31:33):
Well, that’s the problem, right?
Speaker 4 (31:37):
That wasn’t because they couldn’t because there was no enforcement.
Speaker 1 (31:40):
Well, no, but that’s the point. Enforcement comes along when stuff is not being done. So whenever you look at why codes and standards change, so roughly every three years, the standards bodies go through and go through and say what’s working and what’s not working and the whole point at which they win and then put in the 11 and 13 point inspections and they changed materially how fire doors are being managed and inspected and maintained and records and everything is because they’re like, they’re not being done right in the hospitals. If they were being done right, they would’ve never had to go do that. No,
Speaker 4 (32:18):
Here, let me correct you, or at least respectfully tell you that’s not completely accurate.
Speaker 5 (32:24):
Okay?
Speaker 4 (32:26):
The 13 point or 11 point inspection really was in the code a long time ago
Speaker 1 (32:33):
Till when if you, oh,
Speaker 4 (32:35):
Like sixties, seventies, it was written in the code as there are many things written in the code that says you’re supposed to do this. What happened is, again, I hope our audience understands the joint commission surveys, hospitals for CMS as a deemed authority.
(32:56):
And somewhere along the way back in like 2012, or actually it was 2010 CMS was surveying hospitals that joint commission had surveyed and found they weren’t surveying doors that way, even though it’s in the code, they weren’t looking at them, they didn’t have processes placed and they said, you got to fix that. So they created within, it wasn’t SIG at the time, but whatever they were called back then, they created the mechanism to inspect doors now because they got their butts handed to ’em about not looking at those things. And that happens all the time though, where something is found to not be there that needs to be there. And there’s opportunities for businesses all over the place to get the regulators to say, you should be inspecting in the code, but no one’s really looking at it Now, good luck getting them to listen to you. But that’s how that really happened. It was at a congressional level where Congress told CMS, you guys are not doing your jobs and CMS got on the joint commission. So it became part of the inspection process.
Speaker 2 (34:04):
Yeah, and I believe they actually even said Congress told CMS, you got to do re-inspections, something to the level of 3%. Five. Is it five? Yeah,
Speaker 4 (34:17):
It was five.
Speaker 2 (34:18):
I don’t believe you. Ding, ding, ding, ding.
Speaker 4 (34:19):
Four four. Yeah. Really. And you ever been went through one of those? It is fun. We had our facility, the one we were together, we got a resurvey from CMS, which they sent 14 surveyors and three fire marshals for the resurvey behind the joint commission. That was two weeks prior. So talk about a bunch of people running around like chickens with their head cut off. That was us.
Speaker 2 (34:50):
There’s so many places to go here,
Speaker 4 (34:54):
But I was corrected just the history of that. But you had saying something else. But
Speaker 2 (35:00):
His overall point though, I think is still accurate in that there there’s a circle of checks and balances, especially related to regulatory. And so I don’t disagree that well, how do I say it? You can insource things. You should choose low risk things. I think you need to be very careful before you start trying to end source life safety. You need to make sure you’ve created a closed loop if you’re going to do it. You’ve got density, you’ve got your licenses and certifications right now, I’m not one, you’re not going to hear me say you got to have a license to do this and do that. But I do remember when we insourced fire alarm and fire suppression and I had to go get is set level two certifications,
Speaker 4 (35:49):
But fire doors, you don’t need anything. No, you don’t. There’s nothing required. Now places like remediate, and I don’t even know other companies. I know this company have certifications and things they do, but they’re not required. So you can have a carpenter if we’re properly trained, do all the same things, and you can have a secretary manage the paperwork and you can have some electrician do something else to release the doors if you’re doing the release, something like that. But it’s just that kind of a thing that where I’m saying low risk when your need certification, that’s way up here. When I was talking about biomed for example, when you’re talking about MRIs and cts, that’s way up here. That’s later in your evolution of outsource or insourcing. And
Speaker 2 (36:39):
We did biome, we insourced biome, but again, we had a closed loop. We understood the formula we see every day, again, using the 160 hospital system that I’ve worked at and then going to survey hospitals. They are ill-prepared for the most basic things. Can’t a lot of them struggle to get their generator tested on a monthly basis. And
Speaker 4 (37:04):
You know why that is? Why is that? Because the entire program’s outsourced.
Speaker 2 (37:10):
What do you mean?
Speaker 4 (37:10):
Yeah, go a little further. You know what I’m talking about? Their entire, remind me, I’m struggling here. Their entire facility program is outsourced. Technically it is outsourced.
Speaker 2 (37:22):
What I see.
Speaker 4 (37:24):
And so you have no loop at all the closed loop, you have no loop at all to do the kind of things we’re talking about. You have to do it at a corporate level within that out. I mean it’s not literally outsourced, but it is. And I’m not going to go any further than that. But it’s not in the control at the hospital level to do what we’re doing.
Speaker 2 (37:45):
You
Speaker 4 (37:45):
Are
Speaker 2 (37:45):
One of the largest systems in the country, the most respected systems in the country. I want to be careful about giving too much information. You’ll figure out who it is. 95% of their facility leaders didn’t come up through facilities. They were brought in through other areas of the hospital. They know nothing about anything related to facilities.
Speaker 4 (38:12):
And you know why that was? Because the facility leaders at those places wouldn’t buy in to the methodology by which they were going,
Speaker 2 (38:23):
Which is what?
Speaker 4 (38:24):
Outsourcing.
Speaker 2 (38:26):
No, I don’t think that’s it. Oh, absolutely. I don’t think what happens is hospital systems stop investing into facilities. They don’t let ’em go get continuing education. They don’t let ’em hire join as basic needs. Basic needs. I need a resource to get my fire pump tested on a weekly basis or my generator ran on a monthly basis the right way. They’re struggling to get that. They’re being asked to be the, and again, I’m not, I want to be clear, I am not suggesting that facility leaders are uneducated and they don’t understand their craft. But I remember I was working for you at said exo and I called you one day and I said, what the hell? I’m the safety officer now what does that mean? And I had to go figure that out and then guess what? I did that and I did it well and then I was now the emergency management coordinator and I’m like, so that’s what’s happening to these folks. And so they’re saying in some cases, one, I’m taking retirement, I’m 60 years old that this statistic may be out of date, but there is some incredible number of facility leaders that are within five years of
Speaker 4 (39:38):
Retirement.
Speaker 2 (39:38):
And so they’re cashing in. So okay, how are you going to insource?
Speaker 1 (39:42):
And not only that, but the people that are next in line don’t want that job. Don’t want it literally.
Speaker 2 (39:48):
Yeah. And my question is how are you going to insource when you have the next wave of facility leaders? Has no idea about the basics.
Speaker 4 (39:55):
That’s why we’re here today.
Speaker 2 (39:57):
Yeah, I’m going to take that as I won the debate.
Speaker 4 (40:01):
That’s why we’re here today. We’re trying to share.
Speaker 1 (40:04):
But
Speaker 4 (40:05):
History, I agree and that you can get there and that there is an opening. And what I am arguing is that you can’t just throw out the baby with the bath water and just say, throw your hands up and say can’t do anything. There are methodologies I agree with think we’re saying that
Speaker 1 (40:23):
We’re on the other end. You’re almost saying that. You’re saying everything needs to be in sourced everything and hear me out now. Give me a second. And I think that if it was a perfect world and there was a closed loop system available everywhere with unlimited
Speaker 4 (40:38):
Resources, you’re saying unlimited reach to stop saying that because if there was, you have limited resources and you’re spending them
Speaker 1 (40:44):
Okay if IT resources are not constrained, no,
Speaker 4 (40:50):
They’re always constrained.
Speaker 1 (40:51):
Okay, well then if that’s the case, then
Speaker 2 (40:53):
If you operate on the top end of the bell curve, the top three to 5% of the bell curve, you can do this, you can do
Speaker 1 (40:59):
That. And then that’s what I’m hearing and that’s probably great. But I think what we want to try to get to is, look, there is cases where outsourcing probably makes the most sense for the bulk of the bell curve to use that. And there’s cases where insourcing does as well and how do we figure out where or not, because I think taking it one way all the way to the end that says like, Hey, everything should be insourced or everything should be outsourced. Can be, but should be, can be is not even the right equation. It should be, Hey look, here are the things that you should do. You should start with, you should explore. These are the things that make historically the most sense given the environment that is being faced by the bulk of hospital facility directors out there. And then here are the things that are on the other end of the spectrum and here’s why. So some of the things I heard you say were low skillset stuff to start with, right? To start with. So we’ll use the start with phrase then. So what else? Moves? Moves. Internal moves, internal
Speaker 4 (42:02):
Moves. And your electrician staff, you got low voltage cables,
Speaker 1 (42:06):
Cable data drops,
Speaker 4 (42:07):
Data drops,
Speaker 1 (42:08):
Keep going. This is great
Speaker 4 (42:11):
Shit.
Speaker 1 (42:13):
Where else is the starting
Speaker 4 (42:14):
Point? Those are the starting points because you have a lot of money and I’m going to use this term and you’re going to hate it, but wasted on contractors because you’re not doing it. And you could with very little extra. And then you take those ones. And the problem, and this is where Mickey talked about early, the acumen to not give up that money, you have to be there right in front of it. And this is the problem. You’re not saying I’m going to take low voltage drops. And I think there was a number like this, and I think of one place we did, it was like we spend $110,000 a year on low voltage drops and it cost us like 20 to point million.
Speaker 2 (42:52):
No, we spent 1.5 million.
Speaker 4 (42:54):
Oh no, I’m talking the smaller,
Speaker 2 (42:56):
Oh, okay. Sorry.
Speaker 4 (42:56):
Just low voltage where we had this contractor doing like $110,000 is what I could remember. We spent $20,000. No skillset change. It’s just wiring that electricians do all the time. I mean, there’s a little bit of how do you do a drop and do a punch and all that, but you figure those things out. There’s no risk. I mean it’s very
Speaker 1 (43:16):
Little
Speaker 4 (43:16):
Risk, right? Very little.
Speaker 1 (43:17):
So risk is on the other end of,
Speaker 4 (43:18):
So you save, let’s say say $80,000 on that project. The unskilled or naive facilities director takes it out of their budget and gives it back to the hospital.
Speaker 1 (43:31):
But I mean at some point the hospital’s going to know what’s going on,
Speaker 4 (43:35):
Right?
Speaker 1 (43:36):
And you’re going to be going for ft. You go forward
Speaker 4 (43:38):
With that.
Speaker 1 (43:38):
You’re going to be doing FTE discussions and everything else, and you’re going to have to build a case like, Hey, we’re going to have savings, otherwise they’re not going to give you FTS to do it. Right?
Speaker 4 (43:47):
They’re not. They’re going to give you fts ever. Right?
Speaker 1 (43:49):
Well, you know what I mean? They’re not, they’re going to do it. So if you go and pitch, Hey, look, I’m going to save X amount of dollars. Well of course that CFO is going to go
Speaker 4 (43:58):
And you said save. And that’s what I’m saying is you can’t go in there saying, I’m saving the money. I am reinvesting this money and this is what I’m going to do with it right up front. Okay. Not say I that As soon as you say that to the FCFO, your budget’s cut by 80.
Speaker 1 (44:12):
No, but a CFO can absolutely say, go do it, and I’m just going to keep the money.
Speaker 4 (44:16):
Well, no, I’m, here’s the plan. I’m going to go do this. There’s no money
Speaker 1 (44:19):
Change. I understand your pitch, but I also understand the savvy CFO on the other end that is, Hey, that’s great. You can save 80 grand, but you’re just going to save the 80 grand and go do it.
Speaker 2 (44:28):
So again, exactly. So he’s right in terms of, but this is why this is so complicated. If you have educated your administration and if you have a comprehensive list, and we’re not just talking about life safety, we’re talking about capital needs and painting and
Speaker 1 (44:45):
Oh, painting
Speaker 2 (44:46):
Is another one. Yeah. I mean,
Speaker 1 (44:47):
Yeah, no, that’s great. That’s awesome. Places to go with insourcing. I think
Speaker 2 (44:52):
Because a facility director spends most of his or her day getting beat up because there’s a hole in the wall in the children’s unit. I mean, they’ve got how many work orders, a thousand work orders, uncompleted, and it’s all around stuff like that. And you got to get your arms around that stuff and you got to educate your administration. And I’m telling you, we operated an environment that I have not seen in all of the years that I’ve done this. And so my advice to facility leaders was, if you want to try insourcing to this point, I’m agreeing with you, stay on the low risk painting moves, data drops. There is a certification. You don’t have to have it for data drops. But I remember our IT department requested us to have it, right?
(45:41):
So you have to play games like that. But as far as going into life safety, you do not want to build a program for life safety and then have it evaporate. You don’t want to do that. And one, so this is a different system. See, how do I say this? If they figure it out, they figure it out. The largest healthcare system in the country decided they were going to insource doors. It’s fallen apart. It has fallen apart. And I did exactly what you said in terms of, yeah, we’ll train you, we’ll be right there with you. Because I knew it was going to fall apart and I knew that they would call us back and how long it took, it’s still kicking in one area of the country. Everywhere else is falling apart. So we did it.
Speaker 1 (46:39):
So on the other end of the equation, things to stay away from. Highly technical stuff, things that require specialized software training. What else? I’m trying to think what else.
Speaker 4 (46:49):
Licensing of some kind.
Speaker 1 (46:50):
Licensing. That’s great.
Speaker 4 (46:51):
But I mean there’s some things you naturally should have licensed people, but electricians and stuff that you don’t need to stay away from. And
(46:58):
Again, there are so many things. And when you start talking about building automation where you can have an electrician doing building automation, because it’s really all somebody watching is going, oh, it’s not the same. But people get hold really close to their own little world and they don’t want to release it. But if you got a leader that can talk to them and say, it’s all good for all of you because we’re able to keep reinvesting and get more people and get raises for people because we are doing good in this closed system. I don’t even know what that means anymore because there’s very little closed systems. But if you’re going to do that, you start with the low stuff. But I’m not saying ever stop necessarily. I mean, look at each opportunity and if you can go up the chain and keep going up the chain, you go up the chain. Gotcha.
Speaker 2 (47:46):
So let me define closed systems real quick because you’re right. I didn’t really define that. So we had scale density. We had the ability to hire at the appropriate licenses or certifications. We had skilled and motivated staff. We had the ability to hire and maintain or retain. We had the business acumen, which we could talk about. I’ve talked about it. We had credibility and trust with the C FFO and other executives. We were able to get capital and we had benchmarking acumen.
Speaker 4 (48:19):
I forgot the benchmarking. And
Speaker 2 (48:20):
That is very important. That is key. Because the C FFO will look at you and say, I don’t want to hire an FTE and you know this better than I do. So I will defer making my argument. Oh, well
Speaker 4 (48:35):
I know we’re running out of time. We want to talk about finance at one of these in the hospital. But very quickly, CFOs are under incredible pressure. And I’ll go into it at a later session about FTEs. And there’s reasons that they hold very closely to FTE counts within the, you would think, well, it doesn’t matter is if you’re in your budget, it matters to them. And I’ll explain it another time.
Speaker 2 (49:01):
It does matter. And they will literally, because of that pressure tell you no, even if it makes financial sense.
Speaker 1 (49:10):
I think that’s a preview of one of our upcoming
Speaker 4 (49:12):
Podcasts, right? Yeah, it is. So finance FTEs, which is a perfect capital budgets, operating budgets, all of that,
Speaker 1 (49:18):
That’s probably has one of the greatest impacts on insourcing and what we’re talking about
Speaker 4 (49:22):
Right now. Oh yeah,
Speaker 2 (49:23):
Absolutely. Yeah. If you don’t have that, forget it.
Speaker 1 (49:26):
Yeah.
Speaker 2 (49:26):
If you don’t have your financial, you got to understand depreciation because you’re buying capital and you got to know, and that all ties into insourcing. If you are not wired around that you don’t know accounting, you don’t know finance, you don’t understand return on investment, there’s a bunch of other ratios you should know. You don’t know that your CFO’s not going to talk to you.
Speaker 4 (49:48):
Right? We probably should have started there. I mean really not financial acumen, but all of that comes to the point of getting the relationship with your CFO and your CEO EO has got to be there too. But the CFO who can gain the relationship with the CEO EO, if they understand that you understand the finance,
Speaker 2 (50:10):
And I hate saying this because I’m arguing with ’em, and this is a compliment to ’em. I hate saying
Speaker 1 (50:16):
This. Love them. We got to quit the show.
Speaker 2 (50:19):
One of the advantages we had in this closed loop that I keep calling was he was in administration and he has forgotten more than I’ll ever know about. And so he was fighting battles while I was out there setting it up. Where else do you have that? In most cases, when I go the executive of facilities, they don’t know. They don’t know facilities. They don’t know food. They don’t know EVS, they don’t know the other things they’re responsible for. They are typically, they are typically shifting over from some clinical responsibility. And everything you’re talking to them about is brand new. And they do not want to go fight another battle.
Speaker 1 (51:02):
And with that, we are at time. No, that’s great.
Speaker 4 (51:05):
Somehow I figured we were talking too much.
Speaker 1 (51:08):
Well, hey, this is good. We had some healthy discourse and that’s what it’s about. I mean, it’s not a black and white deal, especially getting into topics like this, right? There is no one answer fits all. It’s sort of you’ve seen one hospital, you’ve hospital.
Speaker 4 (51:21):
There’s one answer of we all can agree on, is that there is not one answer to any of this.
Speaker 2 (51:27):
Alright. You want to do key takeaways real quick?
Speaker 1 (51:30):
Yeah. Key takeaways. Do you mind?
Speaker 2 (51:34):
Not at all. So key takeaways, we want to end every podcast with some things for you to just remember and take away with you. So if you want to, insource, facility leaders must have skillset to run a business versus running the facilities department. If you’re going to insource, start with low risk. And in my opinion, humbly, life safety is too risky. Get small wins. You need to build credibility. So if you can show that you can insource moves, maybe you can develop a paint department, then maybe you can go into landscaping, realize that you are asking HR and finance and potentially administration to shift a long held paradigm. You’re basically changing. You’re asking them to change the way they do business and what they know. And do you disagree with any of those? I’ll be damn.
Speaker 1 (52:25):
Yeah. And then I’m not going to disagree
Speaker 4 (52:27):
If I could.
Speaker 1 (52:29):
Yeah. And I think what art has said, incremental steps, right? Do something, get it in, show it, show it’s good, and then go, then take on the next.
Speaker 4 (52:37):
That’s that spec you trying to build with that CFO show. It’s good. It works. And then you start, we didn’t talk about it, but there’s a whole nother group of people. They’re kind of important. The medical side. Oh
Speaker 2 (52:49):
Yeah,
Speaker 4 (52:51):
They got to buy into this. That’s good. And I’ve, in some point I’ll share some of that. I’ve stumbled thinking we’re doing all the right things and not engaging with them about what’s going on. And they think because somebody’s telling them they’re taking over this and they’re not in that field and they’re going to kill all your patients kind of a thing.
Speaker 2 (53:12):
Yeah, that’s true. With medical equipment, I can’t wait until we get some visitors or some listeners or viewers, whatever we call ’em, and we can have ’em call in or whatever and we can argue with them,
Speaker 1 (53:22):
This is so much fun. And then the next time we’re having whiskey, I think, right.
Speaker 3 (53:27):
When are we going to start having happy hour
Speaker 1 (53:28):
During these
Speaker 2 (53:30):
Episodes? Exactly. We’ll do that next
Speaker 1 (53:30):
Time after hours. Yeah,
Speaker 2 (53:33):
That’s
Speaker 1 (53:33):
Right. All right, well, hey, thanks everybody. And next, do we have the next topic? We don’t queue up. We’re
Speaker 2 (53:40):
We’re going to ask for some feedback. Oh, great. A very exciting thing is after these two episodes that we just completed gets edited and we approve it, it will be, what’s the right word? Syndicated.
Speaker 3 (53:52):
Syndicated,
Speaker 2 (53:53):
Okay. So that means people will actually be able to watch it and
Speaker 3 (53:56):
Listen. Yeah.
Speaker 2 (53:57):
Provide feedback. Be gentle. Exactly.
Speaker 3 (54:00):
Give us your best, other
Speaker 2 (54:02):
Than for art, just
Speaker 4 (54:03):
Let him have it after today. I’m sure they will.
Speaker 3 (54:07):
But the first episode will air on the 18th of June, so that’s just, it’s coming out, so,
Speaker 2 (54:12):
All right. Oh my gosh.
Speaker 3 (54:13):
I know.
Speaker 2 (54:14):
I have a face for radio. Good. Alright, fantastic. Hey, thanks. Thanks,
Speaker 1 (54:19):
Thanks. Thank you for hanging out with us on FM After hours. Make sure you follow us on all of our social media platforms for your regular dose of Facility insights. As always, a big shout out to remediate for their gracious sponsorship. Catch you next time on FM after hours.