Changes in Hospital Finance, Operations and Quality After Management Consultants (opens in new tab)

> Nonprofit hospitals in the US (n = 2343) collectively spent more than $7.8 billion on management consulting services from 2009 to 2023. A stacked difference-in-differences design comparing 306 US nonprofit hospitals that used a management consulting firm for the first time with 513 matched hospitals that did not use a management consulting firm during the study period found little evidence of substantial, statistically significant, or systematic changes attributable to management consulting engagements.

For a time period I worked for a pharmacy management company that offered both in patient and out patient cost reduction.

The model we operated on was we kept 50% of all cost savings that we attained for the hospital or health system, on a multi-year engagement. This was just supply chain management, cost optimization, manufacturer relations, pharmacy changes etc. No change in patient care.

The hospitals saved money, we made money, everyone left happy.

The types of deals from the article are more or less what happens when the leadership at a hospital gets bribed at golf, hire some consultant to come in and fire people and not hold anyone accountable for any negative outcomes.

I will never understand why any organization would sign a deal with a consultant and not require an outcome by the end of the engagement (in this case, cost savings). You are quite literally signing up to burn money.