Private equity stakeholder project firms have recently been showing a lot of interest in healthcare roll-ups, investing $1 trillion in over 8,000 healthcare transactions in the last decade. This strategy offers an opportunity to create a larger entity that is better positioned to enjoy economies of scale. With the consolidation of smaller healthcare companies, the costs can be managed better, and investor returns can be optimized. However, to successfully consolidate various companies, it is essential to have a robust HR outsourcing (HRO) partner. In this blog, we will explore the reasons why an HRO makes sense for healthcare roll-ups by private equity firms.

private equity stakeholder project
Enhancing Operational Efficiency 

One crucial aspect of a private equity stakeholder project is to enhance operational efficiency across different units. Each acquired company during a roll-up will likely have its own HR policies, procedures, and cultural practices. This can lead to inconsistencies and inefficiencies in HR operations. An HRO can standardize HR processes that will create consistency and improve efficiency by automating various HR functionalities. For instance, an HRO can provide a single platform for employee onboarding, payroll processing, and benefits administration. This can result in time savings and superior service delivery, which will ultimately lead to better financial outcomes.

Reducing Compliance Risks

The healthcare industry has stringent regulations to ensure patient safety, particularly in areas such as data security, privacy, and employment laws. Compliance with these regulations is critical, and any lapses can lead to huge fines and penalties. Private equity stakeholders in healthcare roll-ups may not be experts in HR compliance, so it can be challenging to keep up with regulatory changes. In contrast, HROs have a team of HR experts who specialize in regulatory compliance. They keep up to date with changing regulations and can assist with legal compliance across multiple verticals. With an HRO, private equity stakeholders in healthcare roll-ups can mitigate the risks of non-compliance. For example, Corban OneSource has experience helping clients with 75 to 6,000 employees handle their HRO services to keep their business running at maximum efficiency and profitability.

Cost-Effective HR Management

One of the key reasons why healthcare roll-ups are becoming increasingly popular for a private equity stakeholder project is the potential to control costs. A roll-up strategy combines the resources of multiple companies, which creates economies of scale, allowing for cost control measures in different areas. In this context, the HRO plays a crucial role in achieving these cost savings. By outsourcing HR functions such as payroll, benefits administration, and employee relations to an HRO, private equity stakeholders can control costs on overheads, such as HR staff salaries, IT infrastructure, and employee benefits. Moreover, the HRO will manage all HR-related taxes, insurance, and regulatory filings. This will enable private equity stakeholders in healthcare roll-ups to focus on their core competencies and drive better returns on investment.

Improved Employee Engagement

Private equity stakeholders in healthcare roll-ups are often focused on short-term financial returns. However, they must also pay attention to employee engagement, as it is a critical factor in the successful integration of multiple companies. Engaged employees are more productive, more collaborative, and more committed to the success of the organization. An HRO can play a significant role in improving employee engagement by providing comprehensive HR support. An HRO can provide a single source of contact for all HR-related queries, allowing HR staff to focus on more strategic tasks. Additionally, it can provide employee self-service portals, which allow employees to access information such as paychecks, benefits, and time off requests, 24/7. These resources will enhance employee satisfaction, reduce HR workloads, and ultimately lead to better business outcomes.

A private equity stakeholder project in healthcare roll-ups faces numerous challenges in consolidating multiple healthcare companies. However, by working closely with an HRO, these challenges can be overcome, and the benefits and returns on investment can be realized. An HRO will enhance operational efficiency, mitigate compliance risks, provide cost-effective HR management, and improve employee engagement. In this context, choosing an HRO partner that can cater to the unique needs of healthcare roll-ups and provide customized HR solutions is essential. If you are a private equity stakeholder in a healthcare roll-up, consider an HRO as an essential partner in your project. Remember, your HRO partnership is likely to be a long-term one, so it is crucial to make the right choice. With experience helping companies with 75 to 6,000 employees handle their HRO needs, Corban OneSource has the experience to ensure your healthcare roll-up is seamless. Contact us today with any questions or to get started.