New York City's public hospital system has selected Boston Consulting Group for a $3.65 million contract to help stabilize the struggling network.
Dr. Ross Wilson, the system's chief medical officer, will spearhead the project as chief transformation officer. He is responsible for executing Chief Executive Dr. Ram Raju's “Vision 2020,” a five-year plan unveiled last year that aims to rejuvenate the health system.
If approved, the consulting contract represents the latest acknowledgment by NYC Health & Hospitals that outside help is needed to implement its strategic plan and collect an enormous amount of health-care-quality data that must be reported to government and private payers in order to unlock bonus funding.
Earlier this year, NYC Health & Hospitals paid Manatt Health $3 million to create a transformation plan, which was closely watched by labor leaders and elected officials who feared job cuts and privatization of services.
The public health system hasn't been alone in hiring outside consultants to handle the barrage of new work created by complex government programs like New York state's $7.4 billion Delivery System Reform Incentive Payment program, which aims to curb avoidable hospital use by 25% in the next five years. Large consulting firms have been called in by many of the area's biggest health systems to prep applications for funding and design processes to report quality data to federal and state programs
The consulting contract, which was approved by H&H's finance committee July 7, goes to the health system's full board for approval on July 28. The six-month accord can be extended to as as long as 18 months and up to $10.95 million.
In paperwork shared with the finance committee, the system said it sought an outside consulting firm, “given the enormous body of work facing the transformation office and its nascent state."
A recent report from the city's Independent Budget Office projected the municipal system would lose a cumulative $6.1 billion from fiscal 2016 through fiscal 2020. A spokeswoman for Boston Consulting did not return requests for comment.
With that in mind, H&H's Office of Transformation is charged with carrying out the goals of both Raju's “vision” and Mayor Bill de Blasio's transformation plan, which overlap but are not identical. Both plans aim to improve patient experience and grow enrollment in MetroPlus. The more recent transformation plan began to address cost-saving strategies, though it committed to keeping all hospitals open and avoiding layoffs. Critics said it didn't go far enough.
The consultancy will also have to craft strategies related to New York state's DSRIP program, which awarded H&H's OneCity Health PPS a potential $1.2 billion in funding last year.
As part of the contract, BCG will identify staffing needs and design how work will flow through the new transformation office. The contract says BCG must stay involved after the office is fully staffed to support H&H's turnaround effort. The addition of new staff will count against any job reductions H&H hopes to achieve through attrition and redployment of its workforce. In late April, the de Blasio administration refrained from offering a specific number of jobs that would be eliminated to improve the system's finances.
Before awarding the contract to BCG, the health system conducted “an informal request for proposals sent to five nationally recognized consulting firms with experience in the relevant field,” according to documents submitted to the finance committee meeting. Information was sent to McKinsey & Co., Accenture, BCG, KPMG and Booz Allen Hamilton.
McKinsey, Accenture and BCG all submitted proposals, making hourlong presentations to a five-person selection committee. BCG reduced its fee to $3.65 million, down from $4.9 million, and won the award, despite a lower bid of $3.45 million from a competitor.
Two finalists were chosen; the losing finalist was not identified.
"City's public hospital picks consultant to help with its overhaul" originally appeared in Crain's New York Business.