Prioritizing Hospital CEOs’ #1 Priority: Cost Control and the Physical Environment

Updated on October 2, 2018

Matt KeaheyBy Matt Keahey

According to Advisory Board’s Annual Health Care CEO Survey, cost control has surpassed revenue growth as healthcare system CEOs’ number one priority. Hospitals are large enterprises, whether they are part of healthcare system with hundreds of hospitals, or a single hospital with hundreds of beds. Additionally, each hospital can encompass hundreds of employees in both clinical and operational faculties. Even as hospitals and their systems grow larger, 62 percent of surveyed CEOs identify “preparing the enterprise for sustainable cost control” as their top priority.

The executive director for research at Advisory Board noted that health system CEOs “recognize that any effective growth or financial-sustainability strategy must be built on a competitive cost structure in order for their enterprises to deliver high-quality, cost-effective care to the patients they serve.” Hospital leadership recognizes this importance in both the practice of care and the environment of care. But how?

When discussing cost control in the physical space of a hospital, the term “investment” may seem counter-intuitive. How does an organization save on costs if it’s investing? This doesn’t necessarily mean a large capital investment, but an investment in the people and processes serving in operational roles that ensure a hospital runs effectively.

Here are three ways to prioritize your facility to enable cost control.

Appropriate Staffing

To grow or sustain an organization that is resilient and profitable, you might be surprised to learn the very strategies many hospitals adopt to save money can cost them far more in the long term. Many healthcare facilities excel in caring for clinical staff with robust training, support and bonuses. The same isn’t true for support or skilled trade staff, however.

For example, it’s not unusual to promote a facilities technician to a leadership position because of their seniority, rather than having the appropriate training, mentoring or leadership ability. This inevitably leads to high turnover, loss of institutional knowledge and a growing reliance on external service contracts that will cost organizations far more than growing in-house capabilities.

The short-term savings from eliminating full-time employees come at a high, long-term cost. Work still must be done, but with fewer staff to do it, facilities are pressed to outsource services. Soon, they’re tied to external service contracts that cost far more than it would cost to hire, train and develop a skilled worker in-house.

By investing in someone in-house, you will find they are easily accessible, and they know your processes, priorities and systems. They’re familiar with the needs and quirks of internal customers, and their loyalty lies with your organization.

Employee Engagement

This doesn’t mean adding ping pong tables and free snacks to the employee kitchen. At many healthcare facilities, associate engagement is an untapped means of enhancing revenue. An associate who feels valued will always do more than required, consider what’s best for the organization when making decisions, and stick around for the long run.

What’s more, high associate engagement has well-documented impact on profits, according to Gallup. Engaged employees deliver 21 percent higher productivity, 22 percent greater profits, 25 percent lower turnover, 48 percent fewer safety incidents and 37 percent lower absenteeism. Conversely, lost productivity stemming from employee disengagement costs U.S. companies $450–$550 billion annually.

Ask your employees how they want to grow. This will help guide an engaging conversation and allow you to show your commitment to helping them grow in their career, resulting in higher engagement.

Data Measurement

Data makes everyone’s jobs easier. But often, strategies, tools and tactics employed hinge largely on personal experience, preferences and hunches. While we want to invest in our employees for their invaluable insights, we don’t want to risk leaving blind spots where resources or problems slip through. This could result in duplicate, inefficient or even needless expenses without data to pinpoint what issues should be tackled.

Pairing activity reports and recommendations with data not only makes your information more precise and error-resistant, but also helps to remove emotion and biases out of discussions. Data also provides evidence, so you can make better decisions and more accurate predictions while avoiding costly mistakes.

Data also allows your facility to set goals for employees and the overall organization. If you know where you want to go – i.e., control costs – take stock of where you stand right now: Evaluate the current state of your departments, set achievable goals for your team to work towards that align with the organization’s goals and establish milestones and reporting processes to show progress.

Final Thoughts

Healthcare CEOs want to control costs in their organizations, but at what cost? While the word “investment” may seem like a step in the wrong direction, by following these actionable items – with little to no added upfront cost – organizations are enabling their workforce up for long-term success, higher employee engagement and lower future costs.

Matt Keahey serves as National Vice President of Operations for Medxcel which provides healthcare service support products that drives in-house capabilities, savings and efficiencies for healthcare organizations that, in turn, improve the overall healing environment for patients and staff. Keahey oversees facilities management services for hospital sites throughout the U.S. and manages Medxcel’s proprietary integrated service delivery model while focusing on customer relations and strategic development.

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The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.