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Shared Administrative Services Can Unlock Great Value in PacMed Affiliation

Published July 7, 2014

The PacMed/Providence Health & Services affiliation is moving forward with positive and promising outcomes for both organizations. One accomplishment particularly worth noting is the review and alignment of administrative services (what we call shared services at Providence) with the goal of improving service and reducing cost for both organizations.

This work is being led by the Operations Committee, chaired by PacMed CFO Scott Combs and Mike Waters, vice president, Physician Services, Providence. The committee is focused on making it easier for both organizations to provide the tools and infrastructure needed to support better service to patients and our communities; to optimize our shared resources and thereby improve the services our administrative teams provide internally; and to identify potential cost savings to be gained through efficiency.

The Operations Committee has successfully implemented changes in two areas where closer collaboration is expected while maintaining quality and service levels within both organizations:

  • PacMed has been able to immediately reduce spending on professional liability and other insurance lines by converting to Providence insurance plans. This puts PacMed in a better position to pursue shared business goals and will result in annual dollar savings in the millions.
  • Providence and PacMed have begun to share internal legal counsel, which will result in cost savings in the hundreds of thousands annually.

 The committee has also identified other administrative areas with the potential for productive collaboration, including:

  • Supply contracts. This has the potential to reduce costs for both organizations by at least 10 percent. The scope of contracts includes office and medical supplies, as well as pharmaceuticals. The committee team is currently working to quantify the savings.
  • Data centers. Consolidating our IT data centers may also yield benefits. Sample outcomes include improved stability for PacMed’s computing environment and the ability to launch projects and products that emerge from the affiliation with greater reliability and dependability.
Other opportunities to make the most of the affiliation in shared administrative services are sure to emerge, while staying true to the shared commitment of ensuring all administrative functions maintain a high quality of service across both organizations. As the Operation Committee’s efforts turn into improved services and realized savings, PacMed and Providence will be better positioned to access the full potential of our affiliation in terms of the products and services we can offer to employers, payers and patients. Ultimately, this will enhance both organizations’ ability to make long-term contributions to the health and wellness of our communities.