It’s a matter of record: Avoiding costly mistakes when buying document storage
Buying records management services involves a lot more than moving boxes of documents into a storage facility. Concerned with getting the best deal, healthcare purchasing agents are often unaware that they may be doing just the opposite. If you’re negotiating contracts with a vendor for services such as storage, shredding, scanning and e-waste, consider the following important factors and practices that could actually reduce costs as well as liability over time, and how seeking a quality experience may provide the best buy in the end.
Short-term goals can sacrifice long-term savings: Focusing on only one or two years ahead is one of the common mistakes a purchasing agent can make. Negotiating a contract up front based on a five, seven, even 10-year horizon will buy more flexibility and the ability to avoid escalation pricing and service fees down the line. Likewise, it gives vendors latitude to be more aggressive with savings for you because they’re working with a higher revenue stream from the beginning.
The cost difference between a 2.5% and a 4.5% price escalation over time.
In this example with a large national records vendor, the 2.5 increase is a 28% escalation over 10 years, while a 4.5% rate increase comes out to a 55% escalation over the same time period, showing a 27% differentiation between the two rates. In other words, when analyzing numbers among vendors, consider looking longer term to demonstrate savings. You can also see how the cost of shredding a box and/or exiting escalates dramatically. Your vendor is counting on you to stay and not shred your inventory. These costs will eventually kill RIM operating budgets if left unattended.
Know where your documents are stored: The vendor may have showed you a shining, modern-looking warehouse in suburban Philadelphia, but your records may be housed in an old, retrofitted facility without sprinklers in Virginia. The company may even charge shipping costs to get your documents to you if you decide to move your account to another vendor! To avoid this bait and switch, be sure you see the exact building where your documents will be stored and that this location is written into your contract. Review with the vendor the following checklist which can greatly impact the long-term protection of your vital assets: organization and storage rack layout, cleanliness, pest control, security features, safety record. Ask about the company’s risk for events such as fire or flooding and the prevention/recovery process. Even the age of the company’s shredding trucks and the lifespan of other equipment can potentially impact the vendor’s performance.
Avoid hidden fees: Insert a clause in your contract that says no other fees will be added to your agreement and that each fee should be defined within the contract, not from what is on the company’s website. This will avoid the possibility of the vendor changing the definitions of the fees at a later date, and thus trapping you into their services for an even longer period of time. Add a rate cap. Putting this information in writing will also protect your rates if your contract is ever bought by another company. If possible, avoid bundled fees in an RFP where increased pricing can hide – it may be appealing but you could be looking at as much as a 30% higher spend over five years, for example, if the vendor gives you one price for everything. Instead, ask for separate pricing for individual services.
Numbers aren’t everything: Service should be a key component of a purchasing decision, but often isn’t discussed until there’s a problem. Determine up front who from the bidding vendor will be managing your account. Will he/she be available when you need then? You don’t want to discover that your account was handed off to someone on the other side of the country, or even overseas (it happens!). Learn the vendor’s process for problem-solving. If something goes wrong, does management step in, and do you have access to them? If the company’s leadership wasn’t involved in the front end, they probably won’t be if a problem arises.
Imagine all the friction and employee hours wasted on your end trying to get quality service from a vendor who doesn’t make it a priority, and potential added costs to switch vendors if you continue to be dissatisfied. That’s why you need a service guarantee with language such as this written into the contract: “100% scheduled service guarantee or your next service is free,” or, “If the client is unhappy with its service within the first 6 months for any reason, the storage vendor will refund 6 months of storage fees and make all of their boxes available for pickup at no cost to the client.”
Retention schedules are a must- Part 1: A typical health system should have an established listing of more than 200 document types. Each document type should have an identified naming convention and a defined destruction schedule. Complicating this procedure, there are state and federal guidelines for retention. Implementing tight control over your records and records program ultimately increases savings on your end and can mitigate exposure risk and potential discovery fees. A good vendor can help you manage this process, from setting it up correctly with descriptive fields to establishing a destruction schedule. Without this schedule, it is unlikely that your end users will commit to a consistent destruction schedule.
Retention schedules are a must – Part 2: Think of the records management vendor as a casino and you, the agent, are playing with its cards. The house always wins because they have set the odds with user activity data that you don’t have. Applying that logic to record retention, the vendor “house” knows you will likely never shred anything. They know that it is too expensive for a user to spend two years of future storage fees just to shred a single box. Users begin to believe it’s cheaper to leave the documents as part of your storage unit collection. The vendor sets you up without incentives to shred the materials as you keep sending boxes, thereby increasing your liability for the contents – and the vendor’s annuity for the hard copy records. To change these odds, focus on reducing the actual quantity of boxes stored rather than storage cost. Ask for shredding and retrieval allowances over the life of the contract during your negotiation. You’ll gain significant discounts over the life of the contract, even if the vendor raises the price. It’s the only way to beat the house.
Think twice about scanning: Scanning may be on trend, but it’s expensive and unnecessary. Most corporate environments, including hospitals, only need about 4% of the records they save. So why are they spending millions of dollars to scan 100% of them? Consider that you could store a box for 72 years and still not cover the cost of scanning. I recommend that customers scan active documents that are retrieved often and reviewed frequently, or permanent records, but beyond that is overkill.
Incorporating the above recommendations is a proactive step toward having more control of your hospital’s records management program, which will result in long-term benefits for your entire organization with increased savings and better service.
