8 Simple Ways to Save Your Hospital Big Bucks Without Cutting Back on Services
Hospitals and other healthcare centers spend a significant amount of money to provide essential services to their patients, staff and visitors. According to healthcare experts, successful hospital management is about offering quality healthcare services without increasing costs. Sadly, not all hospitals are able to achieve this goal because of rising expenditure. Most of the expenses that a hospital incurs are unavoidable, but some of them can be eliminated to help reduce operating costs.
The problem is that most healthcare facilities are not aware of the unnecessary expenditures that they can eliminate. For most hospitals, cost cutting usually results in elimination of jobs or certain services that are deemed to be loss-making. What they don’t realize, is that they do not necessarily have to cut back on services or lay people off in order to reduce their budget. They only have to rework the budget to control overheads, while maintaining the quality of service being offered. If you are looking for tips to bring your hospital's expenditure down and find hospital savings opportunities, here are some you can use.
Review your monthly service contracts
Hospitals require certain amenities and services like air conditioning, laundry, food supply, pharmacy, electricity, IT, and water. Without these, they will be unable to deliver the required services to patients. A common practice is to enter into contracts with vendors who can provide these functions at a reasonable cost. Such contracts are designed to save the facility money, however that is not always the case in the long run. When dealing with third-party vendors it is important to review the contract to ensure that the services being offered justify the amount they are being charged. In cost-related decision making, it is crucial to understand the fine print before entering into a contract, or you could end up being at a disadvantage. Long-term contracts should be reviewed and assessed by the top-tier executives of your hospital management. Also, it is best not to opt for auto-renewal of such contracts, as it prevents you from switching to a low-cost service provider at the end of the contract. Also avoid signing the contract if there is a lock-in period - if the contract has a clause that needs you to agree to a lock-in period, it means that you will be stuck with the vendor for a specific time period, whether or not you are happy with the services.
Make the facility energy-efficient
You can save a lot of money that is otherwise spent on electricity and water by making your facility energy-efficient. Reducing electricity and water irrigation costs are among the two money saving options that many hospital CFOs overlook. They tend to cut down on use of tangible items like stationery to bring down the costs, but ignore things like electricity and water, which are essential amenities that can cost the hospital a significant amount of money.
Change to energy-efficient lighting in the hospital and also remove lighting where it is not necessary. Reducing the number of bulbs and the unnecessary lighting on charts, removing multiple bulbs in a room, and installing switches in areas where lighting is not required at all times are some of the things that can bring down the electricity bills significantly. Also, review and revamp the landscape irrigation system to cut down on the amount of water that is being pumped every day.
One way to achieve energy-efficiency is to create a team and allocate specific energy-saving duties to them. For instance, one team member can be made responsible for checking energy usage and identifying areas where there is wastage of electricity, water or other resources within the premises. Similarly, another member can focus on determining whether the use of water for purposes such as landscaping, is optimized. Identifying flaws in the current system will help management in assessing the extent of energy-wastage giving them the ability to control it.
Go solar and help the environment at the same time
Installation of solar panels is an excellent solution for hospitals that want to save money. While it is true that installation of solar panels requires a large one-time investment, switching to solar energy can save your hospital millions of dollars in energy bills over the years. That's not all, solar energy is always available, which means that even in cases of power outage due to unavoidable circumstances, you will continue to have an electricity supply. There are also various tax benefits that becomes available when the use of solar energy is incorporated.
Repair or replace faulty infrastructure
Wastage of water due to leaky faucets or damaged urinals in facilities is yet another reason for increasing water bills. Get the toilets, kitchens and other places with a water supply inspected by a reliable plumbing company on a regular basis and get the faulty ones repaired as soon as possible to prevent wastage of water and also damage to the property, both of which can cost the hospital heavily.
Revamp your existing air conditioning and heating system
Another significant expenditure that hospitals incur is on air conditioning. Most hospitals have centralized heating and cooling systems, which function round the clock. Sometimes, these are turned on even in unoccupied spaces and rooms, which is a waste of energy as well as money. Also, older air conditioning systems are not as efficient as the latest ones, which could also be a reason for the increasing heating and cooling bills that your hospital may be paying. Get an energy auditor to check your existing air conditioning system and replace it if necessary, to reduce related costs.
Chilled water systems and coffee machines
Many facilities have chilled water fountains and spouts providing cool and fresh water to patients, visitors and staff round the clock. They also have a coffee vending machine, to provide beverages to the staff. By reducing the number of chilled water spouts and fountains, and by minimizing the number of hours the coffee machine is switched on, hospitals can save hundreds of thousands of dollars on overheads.
Cut down on shipping costs
Yet another factor that is often overlooked is shipping, which can cost a hospital hundreds of thousands of dollars every year. Revamp your shipping strategies and talk to your vendors to get discounts on shipping. This should help you cut costs significantly every year.
Shop around for your medical supplies and medical equipment
Another way that healthcare facilities can save big on their operating cost is to shop around for better deals on their essential medical supplies and medical equipment items. This seems like one of the most obvious ways to cut costs when you consider the large quantity of medical supplies and medical equipment that is commonly used in hospitals. However, this is a detail that often gets overlooked as many purchasing agents and hospital executives tend to get locked into lengthy purchasing agreements which limits them from seeking vendors with better pricing and service. It’s never a good idea to assume that you are automatically receiving the lowest prices on your medical supplies and medical equipment just because you signed a contract with a large manufacturer or distributor. It’s always the best practice to compare the prices that you are currently being offered to the prices of other vendors offering the same products. Also, do not just go by the price that is advertised by another vendor. More often times than not, if you pick up the phone and call the alternative supplier, it will be easy to negotiate better pricing considering that you are a large hospital. Our team at Cristia Medical Supply, Inc. have found hospitals that were paying far too much on some of the medical supplies they use the most. We then leverage our different vendor and distribution agreements in order to pit distributors against each other thus reducing the cost of their supplies. We pass the savings along to our clients.
These are just some of the ways in which your facility can reduce its spending. Please be sure to follow our blog for more hospital savings ideas. We plan to roll out more ways to cut cost without cutting back on services on the coming months. We hope you enjoyed our post!
Jonathan Anderson, © Cristia Medical Supply, Inc.