What’s the secret to finding cost savings for hospitals?
Changing your beliefs around what’s possible, can transform your hospital margins.
I’m going to share a story with you today about the Roger Bannister effect.
This is how it applies to hospital cost savings:
Roger Bannister was the first runner to break the four-minute mile barrier.
Before he broke it, no one thought it was possible. Roger’s achievement created a new belief system.
I’m sharing this story because I know that creating a new belief system can reduce your hospital costs.
When we tell our hospitals that they can save 15% or more on their costs, we hear ‘’there’s not a lot of money left in pricing.’’
While you need to look at other areas, I’m here to tell you: you have a 15% pricing reduction opportunity in your costs.
Three areas with significant potential for cost savings are:
1. Purchased services: Line item analysis of your purchased services spend. This is where significant opportunities for cost savings can be found.
In some cases, up to 30% of hospital purchased services spend is either not detailed or does not match contract pricing.
2. Operating Room: The OR accounts for up to 70% of a hospital’s revenue, between 55% to 65% of its margins and 50% of a hospital’s costs.
3. Supply chain: It’s estimated that hospitals can save up to $11 million each year by investing in their supply chain.
When we work with clients and achieve those new price points, their belief system is transformed.
A cost improvement culture is essential to create a high performing healthcare organization.
With accountability and regular monthly measurement of your costs, your hospital will be able to regularly review the success of your cost savings strategy.
I’d love to talk to you about achieving that 15% cost reduction or more for your hospital.
Reach out at [email protected] to discuss your cost savings goals. Learn how we can support and accelerate cost savings opportunities in your organization.