Sep
3

Got Lemons? Make Lemonade!

Dan KinsellaCost Reduction, UncategorizedComments (3)
You can’t pick up a news paper without reading about how companies are adjusting their spending to accommodate the reality of the US and global economy. Proven strategies such as leaning on vendors and renegotiating contracts are getting a lot of attention and can yield predictable, though modest returns on the organization’s investment of human and capital resources.

In healthcare, which is where I practice my trade, the classics include Revenue Cycle, Supply Chain and Labor Cost Reduction. Labor cost in most health care providers constitutes 60-70% of the total cost picture, so it is a reasonable place to start. Revenue Cycle and Supply Chain each warrant careful and periodic inspection to ensure that changes in contracts and complexity of products don’t result in increased costs of inventory, accounts receivable or missed opportunities for revenue capture. In the IT space, budgets have been reduced and major projects have been delayed. All great, short term, tactical responses to the current economic crisis.

But hey, have you thought about stepping up and going against the trend? The list of projects is now shorter, so take on a big one… one that seems too expensive to consider, but one for which you know or suspect the benefits are huge for your organization. Take a more “transformational approach” to the initiative and find the ROI you need to justify even the most significant expense. Clinical Transformation is an example, but your transformation could be focused on your web presence, or your revenue cycle.

Read Clinical Transformation from Healthcare Informatics

In contrast to traditional approaches, transformation leads with process change, enabled by people and technology and supported by a business case. Transformational change is not easy – it requires a strong dissatisfaction with status quo, a vision for a desired future state and the means to achieve the change (key among the “means” items is leadership talent). Could this be right for your organization at this time?

The alternative is to take small, safe steps in an incrementalist spiral as user frustration builds and your enterprise bides its time, potentially losing market position to a competitor who chooses a transformational path.

 

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Feb
8

Cost Reduction Overview

Dan KinsellaCost ReductionComments (2)
Trying to do more with less?  Again?  What are you considering this year that you had not previously as the fallout from the economic crisis rises in your community and your organization?
These times bring out the spirit of sharing of good ideas. Recently I facilitated a Healthcare Special Interest Group for approximately 10 healthcare provider CIO’s in the northeast. Frankly the planned topic of predictions for 2009 and the new president’s plan for healthcare were quickly set aside to make room for a roll up your sleeves exchange about what is working and what organizations are trying in the area of cost reduction.Here is a list of the topics discussed and a summary of the ideas offered:

  • Contingency Planning  - the simple act of working through the what if scenario on potential swings in available capital and operating dollars. Failing to plan is planning to fail?
  • Creating Greater Focus- looking at the silver lining in this dark cloud of an economy. Because you can’t do everything, the good news is that the “noise” is reduced and you might get better results from a smaller set of initiatives.
  • Return of the ROI - focus on investment that will yield a return - increased revenue or efficiency
  • Examine vendor contracts- consider paying more now for a reduced rate over time. Look at the details of that enterprise license.
  • Challenge your vendor partners - Do you need 24*7 coverage for that hardware of software component? What is the risk of moving down from gold to silver?
  • Buried Treasure - don’t overlook the value of assets you already own… Look at that Microsoft license and see what value you can deliver with SharePoint, Reporting and Analytic Services, etc.
  • Labor Cost Management - Since 60-70% of your cost is labor, consider the intelligent implementation of Time & Attendance with your HR/Payroll system to reduce labor costs and simplify maintenance - without headcount reductions (1-5% of payroll has been achieved)
  • Electronic Equipment Maintenance - reduce your spend by 10-20% on the contract maintenance of electronic equipment by considering creative arrangements for almost anything that plugs into the wall

 I will share some detail on several of these in subsequent posts.