Build Versus Buy:
Considerations for Call Center Outsourcing

By Paul Spiegelman

August/September 2006

Most of today's forward-thinking hospitals already have some type of marketing call center in place.  Whether it's one or two people staffing phones in-house, a sophisticated outsource call center partner, or something in-between, hospitals have caught on to the inherent benefits of having a central location for community members to find physicians, register for classes and events, or simply get directions to the facility. 

Historically, budget has been one of the key factors in determining the size and complexity of a call center.  It has also, at times, been a significant driver in deciding whether or not to outsource this important function.  To help you decide between operating a call center internally or selecting an outsourced partner, this article will look at important factors to consider.

Call Center Considerations: A call center should be an integral part of your customer outreach and marketing operations.  As it is often the first point-of-contact for a new or potential patient, a call center is a prudent investment and, when used efficiently, can measure the return on investments for all of your marketing efforts.  In fact, Solucient's most recent call center survey revealed some imposing statistics that illustrate the importance of hospital call centers:

• Forty percent of callers are new callers.

• One in four callers will have an inpatient discharge or outpatient visit within 12 months of the initial call. 

• The retention rate (multiple visits to the hospital) of callers over three years is 70 percent, compared with 46 percent of non-callers.

Through our own work over the past two decades - and based on interactions with more than three million customers a year - we know that:

• Consumers value accessibility, convenience, and customer service. 

• Around-the-clock availability can set one hospital apart from a competitor across town. 

• The burgeoning use of the Internet has compelled more call centers to integrate online communications with their existing telephone operations. 

• Consumers should be able to interact with you in the most comfortable and convenient method. 

• An investment in the hospital call center supports marketing efforts, increases patient loyalty, and attracts responsive patients; all of which help drive revenue. 

In short, whether looking to implement a call center for the first time or reevaluating an existing arrangement, the impact that a call center can have on hospital revenue, profitability, and patient loyalty cannot be overstated.

Call Center Costs: In deciding whether to "build" or "buy" your call center, you first need to assess all costs associated with either option.  Some of these costs may not be immediately apparent.  The following six steps, however, can guide you through the process.

1. Make some basic determinations.  How many calls do you receive or are you anticipating each month?  Do these calls generate outgoing letters?  If so, how many each month?  Approximately how many minutes are spent on the phone each month?  If you have an internal call center now, how many call advisors do you currently have? How many supervisors/managers work in the call center?  How many IT staff support the call center?

2. Look at the costs associated with setting up and maintaining an internal call center.  Each call advisor needs furniture, a telephone with headset, routing system, computer, software with individual licenses, and a printer.  An internal call center requires its own servers, adequate phone lines, and high-speed Internet access.  The entire call center staff needs training (both initial and ongoing) and support.  Don't forget that someone will be needed to maintain all of the equipment.

3. List the direct expenses associated with a call center.  This includes salary and benefits for all of the staff needed to operate a call center, including supervisors, managers, and multi-lingual call advisors.  Also include any support services, such as IT.  Other call center costs include annual software license fees, office supplies, and postage for outgoing letters generated by the call center.

4. Determine the indirect costs.  These expenses include rent, utilities, real estate taxes, accounting, HR, facilities support, insurance, workers' compensation, professional liability, and commercial and excess liability insurance.

5. Add up all of the set-up, direct and indirect expenses to determine total call center cost.

6. Divide total costs by call volume (actual or projected) to establish an average cost per call.

Once you have determined the costs to operate an in-house call center, you now have a frame of comparison.  Contact an outside call center provider - one whose reputation is one with which you feel comfortable - and ask them to provide you with their fees based on the same anticipated call volume and needs you used to calculate your in-house expenses.  Also ask what additional "value added" benefits they bring should you choose them to be your outsourced partner.  You'll also need to make sure you do an apples-to-apples comparison.  For example, if you are considering a 24/7 operation, you need to determine the internal costs in order to compare them to an outsourced provider.

Outsource Call Center Capabilities: A call center can and should be more than just a sum of its operating costs.  A well-designed call center that has accountability built into its core can propel a hospital toward greater revenues and increased market share.  Because outsourced call centers pride themselves in customer service and customer relationship management, they often can deliver value-added services that cannot be replicated in-house.  An outsourced call center partner should be able to:

• Expand your hours of operation.

• Increase your service levels (make sure all calls are answered promptly).

• Expand your service offerings through technology that may not be affordable otherwise.

• Expand the languages you support.

• Introduce you to like hospitals and share best practices.

• Benchmark your organization against others in the industry.

• Use your database as a real CRM (customer relationship management) platform.

• Create revenue reconciliation reports that show a correlation between callers and patient visits.

• Have the flexibility to grow with your changing needs.

• Meet your customer service standards.

In addition to having it be financially sound and having the outsourced partner bring value-added benefits, another reason to consider outsourcing is that hospital resources can be freed up for other purposes.  An external partner enables the hospital staff to focus on what they do best - provide top-quality medical care to their community. 

Paul Spiegelman is founder and CEO of The Beryl Companies.