How to Shred Costs in Document Destruction

In our last post, I shared the challenges many hospital systems face with document destruction contracting. By not addressing these challenges, health systems could be missing out on substantial savings between 40 and 60% and in some cases as much as 75%. Think about the impact to your bottom line if you are ignoring this very lucrative opportunity for cost savings.

E-sourcing to save 55% in 2.5 Months

I shared the story about how one of our clients, a 4,000 bed hospital system with 23 acute care hospitals in two states had multiple vendors in document destruction and didn’t have the time or resources to tackle and manage competitive sourcing in document destruction. Their costs were going up and they needed to take action. They went through a competitive bidding process resulting in an impressive 55% in savings with the entire process taking only two and a half months of time. They also improved service levels and established a uniform destruction policy across their System to ensure they were meeting all existing and future HIPAA requirements.

 

shredded moneyNow, I will share some ways that you can shred costs too.

The document destruction category has its own unique challenges and to ensure the highest possible savings, there are some key areas to address when going through the contract negotiation process.

  1. Discovery: If you have multiple locations with multiple vendors, the first thing you need to do is to embark on a discovery process to identify all sources of costs. Hospitals do not have a clear understanding of how the services are being performed and at what line item costs, because they rely on a third-party to do it. Because of this, you need a proven Discovery™ process that relies on the Incumbent to provide clear data that describes the current services in place. Medpricer has developed document destruction-specific data collection templates that allow Incumbents to quickly define the current state at each facility being serviced.
  1. On site or off site: Document destruction and paper shredding services can be conducted both on-site and off-site, depending on the needs of your health system and other related HIPAA requirements. On-site shredding is typically charged by the pound, while off-site shredding is typically charged based on the number of containers that are physically emptied and then later destroyed. Vendors who shred on-site may provide an added measure of peace of mind above those who do it off-site. The decision can be made by the health-system as to what their preferred method should be, but it’s also common to evaluate both methods of destruction, and a hybrid approach where some materials are shredded on-site while others off-site. Leveraging the experience of the vendors to propose solutions that they believe are in the hospital’s best interest is another way to keep options open and evaluate all potential solutions prior to making a decision.
  1. Type of container: The kind of containers used to hold documents until destruction is a factor to be considered. Will you be using secured boxes or garbage bins? How many will you need? Health systems should negotiate details concerning the containers; in order to save money, vendors should be assigned responsibility for providing these containers on a loaner basis and at no charge.
  1. Frequency: – How often will you require shredding services? During the negotiation process, a standard service schedule must be agreed upon. Your health system should also consider how the materials will be picked up. It’s helpful to start with the existing state (what is the existing frequency), but also ask proposing vendors to identify schedule improvements that maximize resources, reduce costs, and improve overall service levels.  After all, the vendor lives and breathes this category and not asking the Vendor for recommendations is irresponsible. Will hospital employees move the bins to a secure area for pick up or will vendor employees visit each location and remove the bins themselves? It’s ideal to have the vendor manage all aspects of destruction, including the removal of bins.  However, if the Hospital maintains existing resources and has a process that manages this transfer well – it’s possible to retain this in-house service as a way to reduce future cost a bit further.  Each hospital is unique and because of this, there is no way one perfect way to conduct the service, but a competitive bidding process will flush out lots of different options (and the associated cost/benefit) to allow the client the ability to evaluate and choose what’s best for them.
  1. Surcharges: You may find some vendor’s overall costs are much lower than other incumbents; however, these vendors sometimes make up for their loss of margin through fuel surcharges which should be actively negotiated prior to the execution of any contract. Other additional charges to be aware of are the destruction of non-paper items such as disks, CDs, computers, hard drives, etc. Interestingly enough, many organizations actually have separate contracts with other Vendors for electronics destruction, but on occasion use their document destruction partner for destroying these types of items. This happens because the Health System’s end-users may be unaware of their options and may pay a higher cost each time they ask their document destruction vendor to destroy these items, out of convenience, rather than their electronics destruction provider.  You could also consider merging documents and electronics into a single contract as there are organizations that tackle both (providing you the added benefit of a single point of contact, and aggregated volume to drive down costs).
  1. Transition options: It can be a painful process to change vendors. During the negotiation process, vendors should share ways they can help manage the transition process to make it as minimally invasive to your organization as possible so there is minimal disruption to your day to day business. For example, during the implementation process, containers can be switched, by the vendor, after hours. A phased approach can also be used to phase the process in by department or floor. Further, requiring the Vendor to provide a PMP certified project manager to manage the entire transition process from start to finish to minimize disruption should be considered.

If you are saying, this is all well and good, but I still don’t have the time and resources to put these tips into action, then it may be time to call Medpricer. We understand what is unique about document destruction and other Purchased Services categories. Our cloud based analytics technology combined with our experienced negotiation team can help you save an average of 50% in this area or an average of 24% across all Purchased Services. Call us at (888) 453-4554 and learn more about our approach to working with you to maximize your savings.

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