As an organization grows, important functions are often constrained within a framework that may have worked well at one time, but can no longer support expanded needs and activities. For this client, an industry leader in healthcare and life sciences, vendor management had long been administered through its corporate procurement function, but senior management recognized the need for change. In this case study, WGroup’s work resulted in a deal that better served the client’s business requirements in terms of quality, location and service, and at the same time saved the Health care payer about 11%.

1. Opportunity
WGroup’s client, one of the state’s
oldest and largest health insurers,
provides coverage for about 180,000
people.This medium size health care
payer is part of the largest federation
of health insurance organizations and
companies in the United States.
The client was experiencing limited
enrollment growth due to pressures
from large private heath insurers.
They recognized a need to lower
costs and bring innovative IT-based
solutions to market to reverse the
trend and stimulate growth.
The client engaged WGroup, an
expert in outsourcing, IT and
business operations consulting, to
perform a cost and performance
baseline of its Information Systems
organization and facilitate the
contract negotiation process.The
overall goals included the following:
• Collect, prioritize, document and
communicate client requirements
• Provide insight into current
market offerings and trends
• Evaluate proposal pricing
and provider capabilities
• Assess the relative benefits
and risks of a competitive
procurement process, including
multi-provider models
• Recommend the sourcing strategy as
aligned to IT and Business Strategy
• Facilitate leadership approval
of the sourcing strategy
Approach
Using a fact-based assessment of the
operation, WGroup documented the
organization’s current cost baseline
and performance.They compared their
findings with other IT operations
in various industries, as well as with
other health care payer organizations.
The results of the analysis indicated
that partial or complete outsourcing
could effectively bring about rapid
and significant improvement in
the delivery of IT services.
Next, WGroup utilized its proprietary
methodology to qualify potential
vendors, and develop and issue
an RFP.The RFP provided input
on what the client should expect
from the marketplace and included
requirements for implementation
of best practices, improved
performance levels and controls.
WGroup advised the client on all
aspects of the RFP/proposal process,
including selecting which vendors
would participate. WGroup also
facilitated the proposal evaluation phase
and the eventual selection of a vendor.
Drive Your Business
Healthcare Outsourcing
WGroup Negotiates Outsourcing Deal with
Improved Savings
Healthcare | IT Outsourcing
1
WGroup’s work
resulted in a deal that
better served the client’s
business requirements in
terms of quality, location
and service, and at the
same time saved the Health
Care Payer about 11%.

2. The deal implemented comprehensive
outsourcing to all towers:
• Application Development
and Maintenance
• Data Center Operations
and Technical Support
• End-User Computing
• Network Management
• Telecom Management
Due to the location, the client was
sensitive to outsourcing and certainly
to off-shoring.The client retained all
employees for at least one year.They
off-shored none of their services, and
continued to meet regulatory state
insurance commission requirements
while simultaneously maintaining
their standing in the community.
Throughout the process, the
client benefited from WGroup’s
thorough understanding of the
health care marketplace, practiced
skill in developing RFPs, and
familiarity with potential vendors.
Finally, WGroup participated in
the negotiation process, advising
the client on the business terms
and conditions necessary to
support outsourced operations.
Insight & Advice
Because the client sought decision-
making advice through every phase of
the process, they required a consultant
with comprehensive experience in
healthcare IT outsourcing. Drawing
from their extensive experience
helping clients with outsourcing
contracts, WGroup performed a
rigorous a rigorous contract analysis
that addressed both baseline and
cost.This analysis provided the client
with an improved understanding of
the cost management mechanisms
built into the original agreement.
Results
Negotiations led to a 7-year deal for
approximately $82M TCV in which
the healthcare payer saved about 11%.
Contact Us
WGroup
301 Lindenwood Drive, Suite 301
Malvern, PA 19355
610-854-2700
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About WGroup
Founded in 1995, WGroup is a boutique management consulting firm
that provides Strategy, Management and Execution Services to
optimize business performance, minimize cost and create value. Our
consultants have years of experience, both as industry executives and
trusted advisors, to help clients think through complicated and pressing
challenges to drive their business forward.
For more information on WGroup, visit http://thinkwgroup.com