Key to cutting non-labor costs: Ask why 'like a 3-year-old'

LAS VEGAS--At yesterday's Healthcare Financial Management Association ANI conference, Joel Hoff, senior vice president of administrative services at Sisters of St. Francis Health Services Inc. and Hazel Seabrook, managing director of Wellspring+Stockamp, part of Huron Healthcare, shared how they were able to reap more than $44 million in saved non-labor costs for the multiregional Catholic health system with 13 hospitals. (The system has annual non-labor expenses of nearly $500 million.)

The key to finding costs that can be weeded out? "Ask why, why, why like a 3-year-old," advised Hoff. Specifically, the steps needed to create a viable, sustainable cost-cutting process at multiple facilities include the following, according to Hoff and Seabrook:

• Obtain leadership engagement at each facility.
• Engage facility leadership to understand the "system" view.
• Look for opportunities both on a system basis and at individual facilities. Sisters of St. Francis found that many hospitals had "one-off agreements that didn't maximize benefits for the system," said Hoff.
• Mine the knowledge of frontline workers to find out why things are being done a certain way and whether that way is still relevant.
• Develop a sustainable, collaborative team culture.
• Define metrics for assessment and ongoing measurement so that the actual savings can be determined.
• Standardize tools and methods.

To learn more:
- visit the conference website

Related Articles:
Expect hospital supply cost pressures to continue
Find the cost-savings lurking in your supply chain
Supply cost savings part 2: Putting the final pieces in place