In a previous blog post I wrote about the importance of staying in control of your contracts. This post serves to illustrate a recent example of this where a customer was mis-charged for eight years. In today’s fast-paced business world, companies with large workforces, particularly those in clinical environments, rely heavily on efficient, outsourced services to maintain operations. When those services falter, the impact can be widespread, affecting recruitment, staff welfare, and even company financial performance. Third parties are as critical to the supply chain as your internal resource. Recently, a 6,000-employee organisation, faced such a challenge with its outsourced Occupational Health (OH) services. This blog post demonstrates how, with the help of Insider Pro, the company turned things around, reclaiming significant overcharges and improving service delivery without increasing costs.

The Challenge: A deteriorating service with significant financial implications

The company’s Occupational Health services were fully outsourced, covering 46 different services that included critical pre-employment and ongoing health checks, such as vaccinations, blood tests, and medical referrals. These health checks are not just administrative necessities; they are legal requirements to ensure that employees in clinical roles can safely carry out their duties.

Over time, the service from the incumbent provider had began to deteriorate. The result? Lengthy wait times, which in turn led to recruitment delays that doubled the company’s hiring timelines. In an industry already facing labour shortages, this posed a significant problem.

But the issues didn’t end there. Upon a closer review of historic invoice data, Insider Pro uncovered alarming financial discrepancies:

• VAT Mismanagement: Over the past eight years of the contract, there had been consistent mischarging of VAT.

• Retainer Overcharges: The monthly retainer fee being charged was higher than the contractual value.

• Runaway Spend: The company’s expenditure on these services overall had surged to more than 200% of the previous year’s spend, an unsustainable increase.

To make matters worse, the wider industry was grappling with labour shortages and many suppliers were struggling to maintain service levels, limiting the company’s options.

The Solution: Financial Recovery and Service Overhaul

Faced with these issues, the company needed a strategic, multifaceted approach to address both the financial irregularities and the service inefficiencies. Here’s how we did it:

1. Recovering Overcharges:

   • Insider Pro successfully reclaimed more than £100,000 in overcharged VAT from the incumbent supplier. This was especially crucial because the client, a healthcare organisation, was unable to reclaim input VAT on their own, making the overcharge a direct loss.

   • Insider Pro negotiated a settlement for the retainer overcharges, ensuring a smooth transition to a new supplier while maintaining cordial relations with the incumbent provider.

2. Improving Service Delivery:

   • Recognising that the incumbent provider was no longer meeting the company’s needs, Insider Pro undertook a tender process to identify new supply partners. The goal was not only to find a provider that could meet the company’s Occupational Health requirements but also to improve recruitment timelines and service delivery standards.

   • The entire process was completed without increasing costs, a testament to the careful selection of suppliers and diligent contract negotiation conducted by the Insider Pro team.

The Results: A Win-Win Solution

By addressing the financial inconsistencies and improving service delivery, Insider Pro managed to reclaim lost funds and lay the groundwork for a more efficient Occupational Health process in the future. The proactive approach to both the financial and operational challenges ensured a smoother recruitment process going forward, all while keeping costs in check. Overall, annualised savings of more than 25% were secured.

The lessons from this are clear: Regular audits of outsourced services can uncover significant inefficiencies and overcharges. In addition, a carefully managed transition to new service providers can not only rectify existing issues but also provide a path to improved performance without inflating costs.

In an industry plagued by labour shortages and supply chain challenges, Insider Pro’s approach demonstrates the importance of vigilance, negotiation, and strategic planning when it comes to outsourcing key services.

The takeaway messages

When service standards slip and financial mismanagement occurs, the repercussions can be widespread. By taking a proactive stance, this company not only recovered significant funds but also set itself up for smoother operations in the future. The key takeaway? Don’t wait for problems to escalate; regular service reviews and strategic supplier transitions can make all the difference.