Children’s Hospital Los Angeles is a 107 year-old, 286-bed, non-profit acute care facility. The organization, which plans to open a new building in July 2010, hired Steve Garske in September of 2006 to rationalize its IT environment and prepare for the future expansion. Recently, HCI Editor-in-Chief Anthony Guerra had a chance to chat with Garske about one of his passions — getting the insourcing/outsourcing equation right.
AG: So you're saying before you accepted the position, you get an evaluation and presented sort of the path you wanted to go down with the CEO. Did you do all that before you took the job?
SG: No. It was within my first three months.
AG: What did you do before versus after? I’m just trying to get a clear sense of what you had in mind and then your decision process of saying okay, I’m going to take this job.
SG: Well, I based my decision on the fact that I had tremendous outsourcing experience and I knew Children’s Hospital LA well. I knew that the outsourcing agreements and the situation that they were in had to dramatically change. That was a given going into this. The IT environment was falling apart and everyone was complaining about nearly every aspect of IT at CHLA. So I knew the challenge going in, but I didn’t know how difficult it was going to be.
AG: What would your advice be to your colleagues who would be in a similar position in terms of evaluating a potential employer; any advice you could give them on how they can get a sense of whether or not the institution is a place they want to work and they're going to want to work — especially if there is a lot of work to be done.
SG: That’s really dependent on the individual, but for me, the advice that I would give would be to ensure that the analysis is completed beforehand. It is absolutely critical that you determine what you are getting into before you make a move. If possible, try to determine if the company is getting everything that you should from their IT suppliers. You should analyze the suppliers, knowing which ones are there for profit and making a margin only, and those that you can work with. You have to do the analysis. As an example, when we walked in, we determined that we had less than 10 desktop staff onsite from our outsourcer. We determined that we could nearly double the count to 18 and still save approximately $2 million/year just in desktop. That analysis is something that you have to do as early as possible. You must consider multiple factors such as what is the cost per person hourly, if they are exempt or non-exempt, 24-hour shifts, management levels, skill levels, ratios, etc … all of those different aspects that you have to look at when you're providing quality IT service is a critical part of the analysis. Without that, you will not have the data to be able to make the correct decisions. As much information as you can gather upfront would really benefit anyone walking into those types of situations.
AG: Did you know before you took the position that the CEO was going to support you and the changes you wanted to make because you could have come in and they said “oh no, this is the way we want it, just manage it” and that doesn’t sound like something you would have enjoyed?
SG: No, I had no idea which direction it was going to go.
AG: So you didn’t ascertain a buy-in for your plans before you took the job.
SG: No, absolutely not. I walked in and found my predecessor renegotiating with the current supplier to extend the contracts by another four years. At that point we said “hold on, I think we're making a mistake, and let us show you why.”
You have to prove — once again, going back to the analysis — that this is the right decision to go forward with. We didn’t throw all the outsourcers out, we did restructure others, but we didn’t throw them all out. We primarily discontinued the infrastructure contracts, which were the largest contracts. A lot of the decision had to do with the simple facts from the analysis, and being able to present them in a coherent way to the CEO and to the board.
I had to stand up in front of the board and say this is the right thing to do, knowing full well that we are running into a tremendous amount of risk. Just changing over our network, changing over our email systems… changing over all the different aspects of the infrastructure was very, very difficult, but we got through it. The CHLA Information Services team is the best I have ever had the opportunity to work with, and they achieved all of the goals given and many more. All of the credit goes to the CHLA IS team.
AG: So, it must have been a great moment for you when they approved your plan?
SG: It was. It was really exciting. To tell you the truth, when you're presenting a plan of $5.6 million/year savings, which is 15-20 percent of our IT operating budget that opens a lot of eyes, they really saw the financial benefits. And the fact that we were going to be doubling our IS Infrastructure staff, as well as creating a Project Management department, a web development team, and a training team… all these new service aspects have allowed us to not only save the dollars, but complete more critical IT projects than ever before. After the presentation, they thought it was a “no-brainer” if we could complete it the way we presented it. We didn’t hide the risk as far as the transition; but at the time, we didn’t know exactly how much risk we would actually face, so we shared with them what we knew. Fortunately, the team didn’t miss any risks and we were very prepared when we entered the transition. With such an incredible IS team, they completed the transitions and met or exceeded all of the expectations presented.
AG: Just one more question — and answer this as you wish, and if you don’t wish, that’s fine. It sounds like you spent some time at several outsourcing companies. It also sounds like you’ve got a less than stellar opinion of some outsourcing companies. Did you see some things that you just didn’t feel too great about and you wanted to move out of that to the other side?
SG: It is absolutely imperative that you have an IT team that has the experience, knowledge, and preferably have worked on the outsourcing side at the higher levels. I know that the prime objective of outsourcing companies is to make a profit. How that translates into quality of service relative to the business relationship between the two companies can often be negative. It is not always in the best interest of a company to get into those types of relationships, especially if the outsourcing companies are only there for those reasons. And typically, that is the case.
