Part 2: How a CEO Empowered Staff to Save $3M and Their Jobs

Philip Betbeze, April 1, 2011

During the recession, Chicago's Swedish Covenant Hospital chief Mark Newton was unwilling to take draconian measures such as layoffs. Instead, he deployed a tactic from his entrepreneurial background: he challenged his staff to find ways to cut costs themselves. Read Part 1 of the story here.

The first step of Newton's strategy was to communicate frankly with staff. "We decided that if we were candid [with] our 2,200 employees, if they were told the situation, and they realized we were all in the same boat together, they would respond," he explained.

The goal was saving $3 million in a year, which was important in itself, but an additional benefit was in helping staffers internalize a sense of ownership in the institution. As the health of the institution improved, so would the health of their jobs, so to speak. The communications department got involved by setting up a visual aid—a beaker—that would indicate progress toward the goal as the year progressed.

"We reported it out every month and identified stories where people made an impact," Newton explained. "I did not have a consultant, nor did we say people had to ask for permission to use a cost-saving or revenue-generating idea. There was no wasted time in approvals and meetings. If you're doing something that needs the boss's input ask him, then do it. We wanted them to take the risk. It's the ultimate in delegation."

A few of the results:
  • One person in Dietary had a whole different way of buying milk and other food products. That saved $15,600 a year.
  • The cafeteria began selling reusable coffee mugs to save on paper and plastic cup costs.
  • The surgical recovery area reorganized their storeroom and created new par levels, saving $5,700.

Other employees worked on renegotiating contracts with vendors. People got involved in job-sharing ideas, meaning many departments took on tasks that were traditionally outside their boundaries. One department instituted a $20 no-show charge. Another changed how the hospital scheduled surgeries to be more efficient.

Philip Betbeze

Philip Betbeze is the senior leadership editor at HealthLeaders Media.

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