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Higher ed allies in efficiency

Colleges and universities share services to control costs
University Business, May 2016
  • Multicampus dispatch: Officers such as Dulcie McLaughlin, working from a center on Mount Holyoke’s campus, can monitor the Hampshire and Smith College campuses simultaneously. (Photo: Mount Holyoke College Office of Communications/Aaron Haesaert)
  • A hybrid classroom in the school of engineering and design at Johnson & Wales University in Providence. The OSCHEN consortium provides the school’s communications infrastructure.
  • The University of Illinois at Chicago gets access to additional online learning materials because of its membership in the Greater Western Library Alliance.

After six colleges and universities in the Boston Consortium launched a self-insurance program in 2012, healthcare costs at Wheaton College ceased their upward spiral. Health premiums at the small liberal arts college had been increasing by 7 percent annually, but now costs have remained flat for the past four years.

“We’ve changed the trend line dramatically,” says Brian Douglas, executive vice president for finance and administration at Wheaton and a consortium board member. “The increase on our health insurance is now zero, and on top of $4 million to $5 million, which is what my college spends on health insurance, that’s real money.”

Health insurance, along with everything from faculty recruitment to information technology, is one of the emerging areas of shared services that regional consortia are now tackling. Their success in saving money and improving efficiencies has fueled a wave of new collaborations designed to reduce costs in higher education.

“Consortia are really fundamental to our lives these days,” says Mary Case, university librarian at the University of Illinois at Chicago, which is a member of several library coalitions. “I think they will be with us for a while.”

In addition to reducing costs, sharing administrative services allows colleges and universities to focus on other campus needs. For example, the nine-member Brooklyn Education Innovation Network, which launched last year, has been developing internship programs so staff at its member colleges can spend more time helping students with résumés and job interviews.

“It’s all about collaborating and creating economies of scale,” says Edward Summers, executive director of the Brooklyn consortium. “Everything we’re doing allows the institutions to save resources and divert them to other areas they need to fund.”

For colleges and universities to share administrative services, however, they must be willing to change the way they have operated as they enter into contracts negotiated for them by their consortia.

“Change is hard for all of us, but we must begin to look hard at our own operations and change our paradigms of how we do business,” says Keith Fowlkes, chief administrative officer at Centre College in Kentucky, who helped organize the Higher Education Systems and Services Consortium. “For some institutions that have done business the same way for literally 200 years or more, this will be a painful but necessary change.”

Following are snapshots of four ways regional consortia members across the country are sharing services.

Cataloging library consortia

While academic libraries have shared services for decades, the emergence of online academic journals has made these alliances essential. Buying licenses to access these journals can be exorbitant, but group buying power can significantly reduce costs.

The University of Illinois at Chicago Library last year purchased access to a package of online materials offered by the Association for Computing Machinery, the world’s largest educational and scientific computing society. The list price for the electronic resource was $20,600. Because the library is a member of the Greater Western Library Alliance, a consortium of 36 research libraries in the central and western United States, it paid $5,100—a reduction of 75 percent, Case says.

“In this day and age, we simply cannot individually afford the resources that our researchers need,” she says. “Their appetites for information are voracious, so this really does help us provide for our communities a much vaster array of resources than we could do own our own.”

Academic libraries must pay thousands of dollars to join a consortium, but library administrators say the benefits outweigh the costs.

Last year, DePaul University Library, for example, paid a $627,000 membership fee—primarily for access to electronic journals—to the Consortium of Academic and Research Libraries in Illinois. But the value of the products and services it receives, including access to electronic databases and management of its online catalog, is estimated at $2 million, says Scott Walter, DePaul’s university librarian.

“Your dollar goes much further,” he says. “If I were going to spend $600,000 and get $600,000 in benefits, that’s not as good as spending $600,000 and getting $2 million worth of benefits, in terms of things you don’t have.”

Consolidating public safety

For colleges and universities in other academic consortia, improving efficiency may be equally important for reducing costs.

In Massachusetts, three neighboring schools that belong to Five Colleges, Incorporated, and are no farther than nine miles from one another—Mount Holyoke, Hampshire, and Smith Colleges—consolidated their police departments into one force in 2009. Unlike the smaller campus police departments, the unified force became accredited, which requires a higher level of training and adoption of more detailed police procedures.

“As life gets more complex and students get more complex, there’s just more and more need for the policies and procedures and training to be in place,” says Shannon Gurek, vice president for finance and administration and treasurer at Mount Holyoke College.

Another benefit of creating a joint police force is the ability to collaborate on investigations across the three campuses. At Mt. Holyoke’s Mountain Day in October 2015—an annual event when students take the day off from classes to climb Mt. Skinner—police were alerted to a suspicious man by several students. The police immediately alerted the other two campuses, just before the man wandered off to Hampshire College, where he was asked to leave.

“If someone is causing a problem and making our students feel uncomfortable, it probably will happen at another campus, so we were able to pick that up quickly and make sure there wasn’t an incident at the other campuses,” Gurek says.

The 15 members in the Consortium of Universities of the Washington Metropolitan Area decided to share police officer training. “It turns out to be much more efficient for the campuses to pool that activity,” says John Cavanaugh, consortium president and CEO. “If they did it on their own campuses, there may not be a sufficient number of officers to do a training academy.”

Forging digital connections

As the demands on wireless bandwidth on campuses continue to grow, many colleges and universities are sharing information technology services. OSHEAN (Ocean State Higher Education Economic Development and Administrative Network) provides a communications infrastructure to 25 colleges and universities and more than 100 libraries, hospitals and government agencies in Rhode Island and Massachusetts.

Johnson & Wales University in Providence has used OSHEAN to contract for its internet service and to connect buildings.

“We’ve been able to increase our bandwidth capacities as our students come along with more and more electronic devices, and it’s actually reduced our costs over the last few years,” says Wayne Robin, executive director of IT operations at Johnson & Wales. “It’s a win-win situation.”

The Colleges of the Fenway, a group of six schools in Boston, relocated its computer network to a downtown fiber optic hub two years ago, linking its six members to some of the largest internet providers in the city. The arrangement also allows the colleges to negotiate collectively for better internet pricing.

“You’re freeing up space on campus and helping the colleges build redundancy,” says Claire Ramsbottom, executive director of the consortium. “If you have an emergency on your campus and something impacts your physical space, you want that ability to broadcast messages and offer online classes so that electronically, you’re connected to your campuses.”

Containing healthcare costs

The Boston Consortium is not the only collaborative group that has tackled healthcare.

In 2010, the six-school Lehigh Valley Association of Independent Colleges in Pennsylvania created a self-funded insurance program to reduce costs. While each of the colleges was too small to form its own health plan, a collaboration of four of the schools offered enough of a critical mass of employees to make a program work.

A benefit of the self-funded program: If the employees do not use all of the money allotted for health claims in a given year, the difference is returned to the colleges. “What we save is the profit that we otherwise would have paid to an insurance company,” says Diane Dimitroff, executive director of the association.

Since the consortium created the health insurance program, the original three participating colleges—DeSales University and Moravian and Muhlenberg Colleges—have each saved $2 million, Dimitroff says. The fourth college, Cedar Crest, joined the program last year.

The Lehigh Valley plan is similar to the self-insurance program offered by the Boston Consortium; both include stop-loss insurance, in which each group contracts with an insurance company to cover eligible expenses that exceed certain limits during a contract period.

Like other cost-sharing arrangements, creating a self-insurance health plan would not be feasible without the collective buying power of a regional consortium, says Wheaton College’s Douglas. “The consortium has allowed us to accomplish some things that we could not accomplish on our own and to realize some efficiencies and savings that we could not achieve if we were acting independently.”

Another key factor in sharing administrative services among colleges and universities is the willingness of the member schools to change the way they have operated in the past.

Sherrie Negrea, a frequent UB contributor, is an Ithaca, New York-based writer.

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