Creating Higher Ed Efficiencies Through Consortium:

with Dr. Drumm McNaughton and Dr. Michael Horowitz | Changing Higher Ed Podcast 047

Table of Contents

Creating Higher Ed Efficiencies Through Consortium

Creating Higher Ed efficiencies through Consortium. 

Many higher education institutions are struggling with survival. While many leaders are beginning to consider closing the institution, there are other options available. Some of the most commonly talked about are mergers and acquisitions. However, forming or becoming part of a consortium can offer important support that can help an institution survive and even thrive.

Once example of a consortium is TCS Education System, a non-profit system of higher education institutions. TCS stands for The Community Solution in higher education. Dr. Michael Horowitz, president of the TCS Education System, is the guest on today’s podcast.

TCS’ Background

When Dr. Michael Horowitz founded TCS, he was president of The Chicago School of Professional Psychology. Near the start of his tenure, the institution had about 200 students and was one enrollment cycle from closing. Through concentrated effort, the institution then grew to 2,000 students.

Dr. Horowitz realized during this growth process that the institution needed to allocate the responsibility for certain resources—the business side of higher education–to a bigger and broader community. The areas he wanted to delegate were that didn’t directly affect students, teaching or learning. He also believed that the lives of faculty and students would be enriched through creating a bigger community of like-minded institutions. That led to the creation of TCS.

After doing initial research, Dr. Horowitz and some colleagues created a formal system in 2009 that had a common commitment to student success and community impact. This system was designed to support small- and medium-sized colleges, and enabled them to work together to do more of the work that didn’t involve students in order to lower costs, create better systems and alleviate pressure on people. This freed up energy and creativity for the colleges that they could focus on teaching and learning.

Looking at his own institution’s strengths (psychology and behavioral science), Dr. Horowitz tried to invite institutions that offered logical and complementary fields—business, health care, medicine, nursing and law. By 2010, two institutions – Pacific Oaks College and Children’s School and Santa Barbara and Ventura Colleges of Law – joined this new system. Today, TCS has six colleges involved and is in discussions with at least one college at any specific time about joining.

Services Provided

In today’s turbulent environment, higher education leaders should step back and think through every business element that isn’t directly tied to teaching and learning. That’s where organizations like TCS can help – by providing expertise in areas such as accounting, payments, student finance, and the back office of enrollment – things that do not directly involve teaching and academics.

TCS offers these types of services. For example, in a regular college, admissions teams spend an inordinate amount of time on computers processing applications. TCS handles that part of the work so that the admissions team can spend more of its time interacting directly with prospective students.

Additionally, TCS handles negotiations for the major health care insurance contracts and retirement plans. The nonprofit has a marketing team whose only clients are the system’s six colleges in the system as well as a technology team to handle technology systems on campuses. A TCS team also facilitates the logistics for global engagement and partnerships.

This thoughtful delegation allows institutional leaders and faculty to focus on student success as well as those things that shouldn’t be centralized, such as fundraising and community relations. Therefore, a consortium such as TCS allows institutional leaders to spend their limited time focusing on these important issues instead of the details of a healthcare plan.

Dr. Horowitz also noted that there are other existing models of shared services in other industries that higher education can learn from. For example, Zingerman’s Deli offers a model that includes a number of food companies as well as a consulting arm, Zing Train.

The Secret Sauce: Community

TCS’s model is unique in that institutions are part of a formally governed system. Dr. Horowitz describes the “secret sauce” as the creation of community and goodwill that is not a top-down mandate.

For example, there is an academic assembly in which faculty from participating institutions come together to share best practices. They talk about how to share curriculum and courses as well as how to share dual degrees. No one tells them they have to do this; instead, they feed off the excitement of being with colleagues from across the country.

Additionally, TCS brings consortium institutions’ board members together annually, whether at a TCS-sponsored event or another conference. This gives board members from different institutions a chance to come together to discuss what is working and how they are handling different issues in relation to finance and innovation while also creating a level of community.

This community also offers support beyond these meetings. For example, one member institution has board members from other institutions providing valuable input on issues related to starting a new medical school.

A Different Model

TCS is not the type of vendor that is trying to create a profit through shared services. In fact, TCS’s assets remain at and belong to the college and the institution has seen its financial strength grow by being part of TCS. When the TCS IT or marketing team works with a college, the team feels very much part of that college’s mission.

Dr. Horowitz also noted that TCS partner institutions will never have a key position go down – if one college in the consortium loses a leader, other colleges offer to share leaders to cover the gap until a new person is hired. This creates a family, team and community environment that feels unprecedented 10 years after its founding.

Dr. Horowitz supports consortia arrangements because higher education is lacking in the spirit of this type of cooperation. He sees higher education as a team spirit. Consortiums tend to get limited because leaders are taking energy to make a choice, such as sharing the parking lot, library or purchasing function. However, the real benefits are seen when institutions opt in to a model in which they are sharing the whole decision-making process, while in tandem with each college has its own operating board.

Differentiating Responsibilities

The college’s board is responsible for and critical to the operation of each institution. The role of the system’s board is to maintain the overall health, resources and alignment of the entire system. These are two separate and distinct functions and roles. The system’s board never takes up business that is the college’s board. Instead, TCS’s role is to facilitate the mission and strategic plan for each college.

For example, one college wanted to purchase its campus. The role of the system in this situation is to assist and provide the financial acumen to do that. Then its responsibility extends to getting the best arrangement at the lowest terms for the college. However, the system board is not responsible for deciding whether the institution should take this action.

A Neglected Model

Many institutions seem to want to close or merge rather than join a system such as TCS’s. Dr. Horowitz believes that many institutions have a misplaced idea that their autonomy and identity are based on doing all activities (including the ones that TCS offers). They also may suffer from embarrassment about mistakes they’ve made and why they might be in dire-straights.

Once boards get comfortable after joining, they see that they can look at what’s happening in other colleges within the system and learn from best practices. That creates a higher level of performance for boards and leadership.

Dr. Horowitz also points to the proof of the model’s power. TCS’s members have grown academically in terms of their accreditation review and their scope and impact. Today they all have more employees—faculty and student-facing employees as opposed to accountants–as compared to when they joined the system. These institutions also have better facilities and technology and are developing new programs, modalities and outreach opportunities.

Dr. Horowitz doesn’t believe that TCS should be the only non-profit model of this sort in higher education. A number of institutions, especially those that are religious institutions that have a common faith or order, could easily form this type of system.

In the Wake of the Pandemic

This type of model probably will come to the forefront in the post-coronavirus era since many institutions will find that they are not able to afford the backend functions. Institutions can share these types of services through working together.

The sense of community also pays off in other ways in relation to surviving the pandemic and creating higher ed efficiencies. TCS has convened its member presidents as a group to discuss the best response to COVID. They also looked at policies and plans in relation to re-opening campuses.

The TCS internal group also is discussing the best way to spend federal funding offered in the wake of the pandemic. Part of these funds will go to students while part will be spent institutionally.

Three Recommendations for Creating Higher Ed Efficiencies Through Consortium

Dr. Horowitz suggested three takeaways for higher education leaders:

  • Adaptability is the most important thing and this crisis is amplifying that. The most effective leaders in higher education have accepted that change is constant. Be willing to break conventional wisdom and come up with your own model and response.
  • Leaders need to place more attention on financial health. This extends beyond balancing of the budget. Leaders need to look at institutional aspirations for distance education, new programs, and additional student services to determine whether the institution has the capacity to do it. If not, leaders should be looking at other models for operating, such as an acquisition, merger or consortium.
  • Keep your core mission in mind at all times. Are your students successful in terms of retention, graduation, and are they prepared for their future careers? Do they look back and say that they are happy that they spent time pursuing higher education?

Bullet Points

  • Many struggling higher education institutions are considering closing, mergers or acquisitions. However, joining a consortia can provide life-saving support both financially and programmatically.
  • Institutions should consider creating Higher Ed efficiencies through Consortium that has institutions with similar sizes, missions or approaches.
  • Consortia can provide support in business functions (accounting and contracts), human resources functions (health insurance and retirement plans), admissions (inputting applications), marketing, technology, and international partnerships.
  • Most institutions want to remain independent and aren’t used to collaborating. However, a consortia provides an opportunity to work as a team in a collaborative environment.
  • Consortia remove some of the more mundane tasks from leaders’ agendas so they have time to focus on students, faculty, teaching, learning, fundraising and other more critical responsibilities.
  • Consortia also can provide a sense of community where board members, leaders and faculty members can interact with other members to learn about what is happening across the system, identify best practices, and find additional ways to work together and support each other.
  • The system’s board and the college’s board are responsible for different areas. The system would look at feasibility, capacity and contractual issues whereas the college’s board would be responsible for making the campus-level decision.
  • This approach makes sense in terms of dealing with the financial challenges of the pandemic. It also gives leaders a forum to share ideas for re-opening and moving forward in the “new normal.”

Do you need assistance with a merger, acquisition, or strategic alliances? The Change Leader’s higher ed consultants are ready to help. Contact us for a complimentary consultation to see how we can help you achieve your goals. 

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