Optimizing a healthcare provider’s IT operating model and talent strategy saves $400+ million

Our impact

Our client sought to improve their IT organization, reduce costs, and optimize talent through strategic outsourcing—with the intention of adding business value and unlocking new capabilities. West Monroe helped the client analyze their goal against the current plan, revealing that their original strategy was too narrow.

They needed to address four pillars simultaneously to reach their goal: employee optimization, contingent talent, strategic outsourcing, and automation. Instead of focusing on a plan that targeted one single dimension of the problem or only addressed a few suppliers, it was necessary to create consistency in pricing, performance expectations and commercial terms, leverage their best suppliers, and get measurable insights into actual spending. We also helped redefine their operating model, modernize telephony technology, and establish a preferred supplier program to improve IT service delivery and external talent.

The Full Story 

The Challenge

The overall cost of healthcare is increasing—and our client was not exempt from that, experiencing year-over-year increases in operating losses that were unsustainable. To that end, the CIO was tasked to reduce the overall IT operating spend—but lacked full clarity on how to achieve it without causing disruptions and didn’t have a clear picture of how much they were spending on their contingent talent workforce.

An Undeniably Different Approach

When our client contracted us for the project, they were planning to outsource with a limited set of IT services they considered back office. We helped them re-think the objectives of the IT operating model and how proceeding in parts would not have realized the end goal.   

We redefined the IT operating model through organizational design work in parallel with outsourcing non-strategic work. We were able to logically separate functions such as business relationship management, strategy, and architecture—ensuring business intelligence stayed in-house.

This approach enabled us to outsource service delivery functions. How did our method address the core pillars of organizational talent? 

• Strengthened internal people pillar. Outsourcing jobs unrelated to business intelligence allowed our client to be more precise about talent acquisition and fill previously overlooked gaps—adding dedicated expertise for high-level strategy and architecture functions that were previously neglected due to all hands-on deck ‘firefighting’ operational focus.

• Outsourcing enhanced scalability across functions. Outsourcing strategically allowed our client to leverage the economies of scale of managed service providers, enabling them to raise and lower resource consumption on demand.

• Controlled contingent talent spend. Previously, our client struggled to access critical talent quickly such as project managers with EMR experience. At the same time, they were paying a premium due to inconsistent pricing. Consolidating suppliers allowed the client to increase capacity with the best suppliers while standardizing roles and pricing. 

Our approach wasn’t single-threaded. Instead, we looked at all the pillars of strategic workforce optimization, including internal staff, outsourcing, contingent talent, and automation. This holistic mindset led to significant gains and durable operational change.

Real Results

Our engagement helped the client shift their focus from a survival mindset to a forward-thinking business enablement approach. This is partly due to the massive savings our client is expecting — more than $300 million over the next five years from the IT service delivery model redesign. Additional savings are coming from telecom expense management, resulting in $75 million over five years. Most recently, the client has added another $50+ million in savings over five years by addressing the client’s largest contingent talent spend.  

But cost savings wasn’t the only measurable benefit for our client. By standardizing roles, we unified role definitions and rates across the board. We also consolidated suppliers from hundreds down to 10-14 — simplifying supplier relations and standardizing pricing. Overall, this project will lead to higher service level agreements, operational performance, and a supplier arrangement built for delivery at scale.