By: Kent Spafford, Chairman of the Board, One Call Medical
Since my first column, “Embracing Quality,” I have received a significant number of responses from readers who agree that price can no longer be the sole criterion by which they make their service-buying decisions, and quality has become increasingly more important to an overall cost-effective service delivery model.
In the past week, workers’ compensation professionals have been asking what types of criteria and performance measures they should consider when assessing the quality of their service providers. This article aims to outline key factors to broaden the perspective of potential shoppers, so they can consider qualitative attributes they may not have initially thought of.
Buyer Beware: The Sales Representative Look-Alike Contest
Imagine sitting at your desk across from a sales representative, who works for a service provider you’ve been considering for several months. The problem is you’ve sat down and had similar meetings—almost the very same discussions—with several other sales representatives from other vendors. They’ve all made similar claims of low price, high quality, and since they’ve all promised the moon, quite frankly, they’ve all begun to look alike, so how do you make a wise buying decision?
At this point, having met with several sales representatives, everything you’ve heard about their respective companies is based on the assertions they’ve made. You have no idea of knowing what’s behind their flashy presentations or glossy marketing material—unless you do your homework…
Obviously, there is a wide spectrum of services in today’s workers’ compensation market, as well as an endless number of criteria by which to assess quality service. What follows is an overview of key criteria you may want to consider in your vendor selection process. This list is by no means all-inclusive, but it provides important guidelines that can help you expand and deepen your understanding of how quality service can be identified, measured, and monitored:
- Visit the Vendor. Get to Know Their People.
You’ve met and like the sales representative, but if you sign a vendor contract, you’ll be handed off to other people in the organization, such as account management, client services, and operational staff. These are the people with whom you’ll work on a day-to-day basis. To find out what they’re like, go visit the vendor.
Ask service providers to outline the type and schedule of training that they provide to their staff. An internal emphasis on continuing education means your organization will benefit from a consistently high level of expertise that never goes out-of-date. Many times, a service provider who has a strong internal emphasis on continuing education will also offer industry education through CEUs. Be on the lookout for telltale signs that expertise and education are deeply ingrained into a vendor’s culture and values.
- Vendor Reach
A vendor’s reach is also critical, and there are several facets of reach to take into account. First, there’s the size of the organization, and whether it can effectively support the volume of business you bring to the table. Second, your operations may be focused in a particular region or spread across the U.S. Whatever the case, you need to consider the vendor’s geographic reach and whether it’s well aligned with yours. Third, consider the vendor’s scope of services. Do they offer just one specialty service or a complete suite of related services? This could enable you to consolidate and streamline vendor relations. The fourth consideration is consistency across the vendor’s reach. Buyers must insist on consistent quality regardless of size, geography, and scope of service. Does the vendor have a structured, systematic process in place to ensure quality across all these elements?
- Financial Stability
In the consumer world, credit scores are a quick way to assess the credit worthiness of individuals. In business-to-business transactions, however, there’s no easy way to check on the financial stability of service providers. To start, you may want to obtain a report on the company from Dunn & Bradstreet, the world’s leading source of commercial information and insight on businesses. You can also perform background checks on the company’s principals.
- Test Their Promises: Performance Measures & Ongoing Monitoring
Every service varies in the way quality is measured. Find out what type of performance reports service providers regularly offer existing clients, and what types of performance standards they already measure and monitor. Then, give some thought to other metrics or benchmarks you’d like to track.
- A Complaint Desk
In the service industry, no one’s perfect; problems always arise. Even the best airline has a “lost luggage” counter, and department stores have a “customer service” desk. When evaluating service providers, make sure there’s a system by which you can lodge service and quality complaints. Be sure this process provides a quick investigation into your issue and a prompt response or resolution. A solid problem-resolution model has the power to drive customer loyalty in a long and successful partnership.
- Investments in Technology & Infrastructure
Technology is another key ingredient. Be sure your service providers have made appropriate investments in technology and infrastructure to meet your business needs as well as current market standards. For example, many payers and adjusters want easy-to-use online capabilities to make service requests and receive status reports or medical reports.
- Compliance with Regulations
Today, public companies must comply with regulations, such as the Sarbanes-Oxley (SOX) Act of 2002. Under Section 404 of SOX, public companies are required to report on their controls to secure and protect sensitive information. As interpreted by SOX legislation, service providers who host, manage, and process client information are viewed as extensions of the companies they serve, and therefore, must also meet rigorous controls.
- Your Guarantee: The Service Level Agreement (SLA)
When you buy a product, such as a computer or television, there’s typically a warranty. If it breaks or doesn’t work, the vendor will either fix or replace it. Until recently, when you paid for a service, there was no guarantee that it would be performed to the level initially agreed upon.
You’ll obtain a much clearer perspective of a service provider when you actually pull back the curtain and see what’s going on behind the scenes. Sit with the operations or call center staff. Observe how team members work and deal with other payers, employers, injured workers, and medical providers. As you watch these interactions, keep in mind that these professionals will serve as an extension of your organization, a representative on your behalf. Do they express the care, compassion, and service-minded attitude you’d like to see exemplified in each exchange?
In the end, whatever vendor you visit, the meeting should give you a greater appreciation of what goes into a particular service, and how good the provider is at delivering it.
Another to be aware of is the fact that many vendors outsource part or all of their service delivery. In workers’ compensation, even in outsourced arrangements, statutory requirements and timeframes must be met, such as paying medical providers according to mandated timeframes. You pay your vendors on time, but will these vendors in turn pay their providers in the same conscientious fashion? In today’s tough economy, the answer may be “no.” Many vendors are being forced to float funds so they can afford to pay their own bills, while delaying payment to providers. Ask your vendors to demonstrate the timeliness of their payment cycle.
For one type of service, the key metric may be response or turnaround time. For a call center operation, it might be how quickly a vendor can answer calls. For a scheduling center, it may be how promptly vendors schedule medical appointments for injured employees, and how efficiently they can deliver the resulting medical report to treating physicians. With a medical bill review company, a key criterion may be determining if bills are accurately re-priced for optimal savings. For other types of service—such as pharmacy, transportation, and translation—you may want to look at successful fill and completion rates.
Also, check to see if service providers are willing to schedule performance reviews at regular intervals to discuss metrics, data analytics, performance reports, and account for service levels in general. These meetings are a great opportunity to discuss issues, opportunities, and areas for improvement. For example, many third-party administrators (TPA) perform quarterly file reviews with clients, so they can review problems claims as well as ongoing claims-handling challenges. To resolve issues quickly, be sure representatives from both account management and operational staff can participate in these stewardship meetings.
Quality vendors usually have a strong delivery model, so they can consistently provide quality service with a low rate of client issues. In addition, they take complaints very seriously, and are often able to quote you their average rate of service-related issues and complaints per year—and in the case of quality service providers, obviously, this rate is typically very low.
You may want to ask the vendors’ existing clients what has been their experience with service-related issues. How long does it typically take to resolve problems? What’s been their experience in getting issues addressed to their satisfaction? Do adjusters have to spend an inordinate amount of time dealing with issues that arise out of poor service?
If you perform a vendor visit, this is another area where you can get a quick peek behind the curtain. Ask to see the vendor’s main technology or computing room. Does it look like an advanced NASA station? Or is it a substandard operation with laptops stacked in a closet, serving as the company’s main server? Be sure to ask if the company has invested in data backup and redundant systems. If a power failure or heavy storm should occur, you can rest assured that the vendor has data recovery and business continuity plans in place.
As a result, many buyers are in search of service providers that have SAS 70 certification, which is critical to their compliance with SOX. SAS 70 Type II is an internationally recognized auditing standard developed by the American Institute of Certified Public Accountants (AICPA), which indicates that service providers have undergone an in-depth examination of its internal controls and security processes. In fact, the U.S. Securities and Exchange Commission (SEC) designated SAS 70 as the acceptable method to confirm a service organization’s internal controls.
If you require a SAS 70 certified vendor, you must realize that it comes with a price. The third-party audit required to verify SAS 70 compliance is expensive—in the range of $150,000 to $200,000—and maintaining compliance staff can cost an additional $120,000 to $220,000 a year. Ultimately, these expenses boost a vendor’s service price. If SAS 70 is an important factor for your company, take this into account when weighing cost versus quality concerns.
Today, however, customers are becoming savvier and are demanding a similar form of warranty on their service purchases in the form of a service-level agreement (SLA) in their vendor contracts. This gives the buyer a guarantee that the service will meet a minimum standard, and if it doesn’t, the vendor agrees to make some form of financial amends to the client. For example, the vendor may agree to discount the price or extend the service period. By engaging in SLAs, vendors willingly stand behind their service, which speaks volumes to their commitment to quality, and gives payers an added level of assurance in their selection.
Quality as the Vendor’s Key Value
When you’re evaluating a vendor, you want to walk away understanding what that company values most. Its primary focus should not be on “cutting corners” to deliver “cheap” service. Instead, to meet service buyers’ demands for quality, the focus should always be on a high-level service and customer satisfaction.
If you’re still weighing the options and uncertain as to the best vendor, survey your claims staff. At the desk level, adjusters have ongoing interactions with service providers, and they know the vendors they can rely on time and time again to deliver quality, efficient, and cost-effective service.
However, at the end of the day, if you’ve done your homework on a vendor and you don’t feel comfortable with some of the answers you’ve uncovered, look elsewhere. Ultimately, you want to engage with a vendor who has a business model aligned with your values and key priorities—only by doing this can you hope to build a long and successful partnership.
About Kent Spafford
Mr. Spafford is currently the Chairman of the Board at One Call Medical, Inc., joining the company in January of 1999, after successfully leading a Wall Street-backed recapitalization of the company.
Mr. Spafford began his career with the General Electric Company in their medical systems division as the sales manager for the Western division for 10 years. In 1989, he moved to Intracorp, a wholly owned subsidiary of Cigna, as Division Vice President and General Manager. He has also held executive management positions at Image America and Principal Care.
About One Call Medical
One Call Medical (OCM), the nation’s leading provider of specialty services to the insurance industry, has a “smart partner” approach in delivering its suite of easy-to-use, efficient, and cost-effective ancillary services that help claims professionals to achieve superior outcomes. OCM enables injured claimants and insurance payers to get the best quality and value for diagnostic scans and electrodiagnostic testing—the building blocks for successful treatment plans and optimal return-to-work results. Through its STOPS subsidiary, the company provides transportation and language services, required by today’s increasingly diverse claimant population; and through its Express Dental Care subsidiary, OCM assists with all aspects of the dental claims management process, as well as handling referrals to hearing, eye, and other hard-to-find specialty providers. OCM’s customers include the nation’s leading insurance companies, third-party administrators, payers, and self-insured employers. More information about One Call Medical can be found at www.onecallmedical.com.