Hard on the heels of congressional testimony into their unbridled corporate avarice, executives from Goldman-Sachs announced their intention to enter the HIT consulting field. Their rationale:
Profit Margin – where else can charge two to three times more than your costs:
* “Juniors” – recent college graduates are paid about $50K, and can be billed out for about $125 per hour, or $200K per year (at ≈1,800 billable hours per year).
* “Senior” consultants (who have actually been in a hospital before) are paid from $100K to $150K per year, and can be billed out for $200 per hour, bringing in $400K income per year.
* “Executives” – a handful of really senior, knowledgeable pros do command high salaries ($300K+), but you only need a few for sales, and you can bill them out at $400+ per hour, $700K or more per year, while they are “managing” projects.
Stacked Deck – you get paid to sell your next product(s)! While writing “consulting” reports, you load them up with recommendations for the client to buy your next product/service:
* If you are doing an RFP for a system selection, stack it with features for the HIS vendor your staff is trained to implement.
* If you are conducting an I.T assessment, recommend they either switch to that same HIS vendor, or outsource their I.T. department to you.
* If you are writing a strategic plan, make sure it includes a “clinical transformation” project that your staff R.N.s and M.D.s perform.
* If you are serving as an “interim” CIO, recommend they hire several other members of your firm for director/manager slots.
Revenue Mania – you can generate amazing numbers for Wall Street through outsourcing, which is the latest fad in I.T. management anyway:
* Say you to take over the 20 FTE staff of a hospital’s IT department, whose salaries and benefits total about $2 million per year,
* You tack on a 25 percent profit margin, now costing them $2.5 million a year, but getting far “better” results because of your expertise …
* Write a contract with SLAs as soft as frozen custard, with minimal penalties or remedies,
* If you sign a 10-year deal, you can book $25 million in revenue and $5 million in profit to your bottom line, all for the only cost of a sales presentation!
* Sell two or three of these gigs a year, and in three to five years, you’re a major player, and all with almost zero capital investment or risk!
But Wait – There’s More! – you can make even more money “double-dipping” the hospital’s I.T. staff you acquired through outsourcing:
* Every I.T. shop has a few superstars, experts in nurse informatics or Internet security, who are extremely talented and marketable.
* Since they now report to you, you can offer them “career opportunities” by selling them to other hospitals at high rates.
* Either transferring them full-time, or charging them out by the hour or the day, and all while the original hospital is paying for them!
* They report to you now, so no one can ask where they are or what they are doing, that’s your business …
* As long as you can keep up with the paltry SLAs you agreed to in your one-sided contract, with a pittance in penalties if ever violated.
What’s It Take? – But, you say we don’t know anything about health care? That hasn't stopped a bunch of hardware manufacturers lately:
* All they had was a big name and a billion-dollar balance sheet, just like us! Only time their executives were ever in a hospital was for youthful tonsillectomies …
* Yes, our main business is investment, not health care, but their main business is manufacturing computers--what’s that got to do with running a hospital?
* We’ll just buy up a few mid-sized HIT consulting firms to get a core of pros to start selling, motivate them with stock options, and away we go!
Sound a little amoral or underhanded? No more than selling investors mortgage derivatives, while at the same time short-selling them yourself. Yes, we think we’ve found us a new home: HIT consulting, here we come!
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