Even healthcare organizations need Cost Management Solutions perhaps even more than most would think. A healthcare organization is just like any organization and they need to have a proper handle of their revenue, cost, and operating capital. Just like any organization that seeks to be profitable, they should work towards reducing their cost, having sufficient cash flow and operating capital and increase their revenue when possible. This also stands for not for profit healthcare organizations. Even though making a profit is not a priority, keeping the hospital or healthcare organization open is a priority and that might be in jeopardy if there is no sufficient healthcare management. Below we discuss some cost management solutions that a healthcare organization can implement
Top Cost Management Solutions To Implement
Have a Solid Cost Revenue Structure
If the foundation is not strong there are bound to be problems as you build in it. This is one of the most important facets of cost management. A healthcare organization should understand its cost-revenue structure. There should be someone in charge of the finances usually a CFO and a financial/accounting department. They should understand the cost-revenue structure but also other top and middle-level management should have an understanding of the cost-revenue structure as well. The Financial department should understand which revenue streams are the most viable, where the most expenses originate and the correlation between the revenue streams and expenses.
Reduce Interdepartmental Conflicts
A typical hospital or healthcare organization has a lot of departments and they work together in everyday activities and sometimes in long-term strategies as well. The Hospital management should work towards reducing any departmental conflicts or discrepancies that might arise. They can do this by having a properly mapped out process map and sufficient communication on what each department does, what is expected and how they relate with other departments. This way time wasting and expensive discrepancies can be avoided. A process map or flow chart also gets rid of unnecessary steps in the business process that could be costing the organization money, time and useful manpower that could be directed elsewhere. This is a cost management structure that is proactive or preventive in nature because otherwise there might be lots of damage and loss in revenue that might disrupt the financial health of the healthcare organization.
Continually Train Employees
Educating employees on things like team building, decision making, leadership, problem-solving, cost saving and other aspects of management will help them be more efficient. It will reduce unprofessionalism and errors in the workplace and this will lead to fewer mistakes being made. When a company regularly invests in its employees it builds a company culture of excellence and employees will have more viable input to give in the company. This will lead to the company finding more cost-effective ways to do things and there will be less waste because fewer mistakes will be made.
Bootstrapping is an activity practiced mainly by small companies and start-up companies but that does not mean bigger organizations cannot practice and benefit from bootstrapping as well. Companies can control costs in areas that can be managed and try not to spend too much on frivolous things. They can do somethings in-house and reduce cost so long as it does not compromise the integrity of the companies operations or its good and services.
A healthcare organization should benchmark itself against other organizations in its industry and in its locality and learn from what these companies are doing better. Review how costs match with the cost of other similarly sized healthcare organization and tweak accordingly. A lot of benchmarking data is public record and can be accessed but when the data is not readily available, a healthcare organization can form a data sharing alliance with other healthcare organizations and use it for benchmarking purposes. A healthcare organization should periodically review its operations and how it handles cost issues with that of other organizations and make improvements when there’s room.
Regularly Review Finances
Healthcare organizations with the help of a financial team or financial department should put a strong and viable financial plan in place at the beginning of the fiscal year. This plan should not be left as is throughout the year. Instead, the financial team in the healthcare organization should regularly review the financial plan and make tweaks and improvements where needed. They can look at their financial relationships with suppliers and vendors and make improvements like having longer supplier agreements could lead to higher discounts. Looking for low-interest loans, paying off debts with high-interest rates etc. Cost decisions should be measured against the company’s strategy, rather than a current short-term situation. Regularly reviewing financial plans will lead to cost-saving strategies that were missed at the beginning of the fiscal year. Also, times change and situations arise and being able to take advantage of any new macro changes and be flexible with the plan is always a good idea.
Going paperless is in itself an investment in technology and a contribution to making the environment better. Going paperless means getting rid of costs like paper cost, ink costs, printer costs, fax machine costs etc. Going paperless also means not printing unless absolutely necessary, transitioning to a digital invoice and bill payment system, and filing all important paperwork on your computer instead of a file cabinet. By the time a healthcare organization adds up all that cost that’s acquired over time and compares it with the cost o getting tabes for and more computers for its staff, they would find that going paperless is a cost management solution that will save them a lot of money.
Customer and patient feedback is always a valuable resource if the organization knows how to tap into it and utilize it to make better business decisions. Small cost can be reduced or eliminated by making little tweaks and this also could be an opportunity to increase efficiency. A healthcare organization’s customers and patients are the best people to tell you about which parts of your service are important to them and which are surplus to their requirements.