It’s hard to read a healthcare publication or look at a website these days without reading about the incredible amount of wasted spend in healthcare. Pretty much every aspect of our healthcare systems are being scrutinized these days—from inefficient care execution to administrative waste to inflated prices, just to name a few areas that typically come under the microscope.
In my experience, I have seen that if an organization is financially strong, then the entire operation is stable. However, as soon as financials start to turn south, a common theme in healthcare is to create a quick reduction to cut a certain percentage of an organization’s operating budget.
Healthcare organizations could eliminate the need for those quick reductions by better managing two critical areas that account for the biggest expenses in the industry: Labor and supplies. We have recently seen that Infor customers are starting to look into how they can reduce labor cost and software maintenance cost for the long term instead of how to enforce a quick fix. But where do they find room in the budget?
Start with data and data science to uncover waste
Money can be found by leveraging available information to help make better decisions quickly with inventory intelligence. Since supplies account for one of the largest costs within healthcare organizations, inventory management is critical to the success of the entire operation. Inventory intelligence uses science, data, and past usage of inventory over a period of time to make recommendations on setting re-order points on inventory levels. This solution takes a look at re-ordering at a different frequency, which is a huge opportunity for savings and can provide a high return on investment and ultimately reduce supply costs.
In addition to inventory intelligence, human capital management is another area to examine for additional cost savings. Hiring and employee engagement pose many challenges including turnover and time to fill positions. You need to ensure you get the right person into the right role, and organizations that use solutions like this have seen a higher success rate with employee engagement and less turnover, which leads to overall satisfaction with nurses and patients. Leveraging data, instead of intuition with hiring, positions people in the right roles and helps you manage costs. It also eliminates the added expenses that organizations incur for replacing employees, which ranges from $37,700 to $58,400 per year to replace bedside nurses when they leave positions.
Scheduling and staffing solutions can also be used to keep employees engaged because they are able to choose the employees they work with on shifts and gain more flexibility regarding when they work, which is important among Millennials. This results in happier employees, and the more likely they are to stay with a hospital the less likely your organization will have to hire new people. If you can balance the workload, it would promote better employee satisfaction, a better patient experience and better HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) outcomes. Millennials represent over 35% of the workforce and they have very different expectations as it relates to when they work, how they work and with whom they work. Now employers should consider alternate schedules, schedule equilibrium and specific employee preferences.
If your organization closely examines costs associated with supplies and labor, specifically with regard to inventory intelligence, scheduling and staffing, and data to help inform hiring practices, you’ll be well on your finding money in your healthcare system.