Reducing Operating Cost in a Financially Stable Health System
Reducing Operating Cost in a Financially Stable Health System
Our organization has been challenged to reduce operating costs by $100 MM over the next 3 years without a reduction in human capital (FTEs). This reduction is aimed at allowing financial resources to be re-allocated to primary/ambulatory care initiatives and community-based health programs an to decrease “waste” and operational inefficiencies in the hospital-based setting.
However, as a financially stable and high-performing organization (operating margin of 7%; gross revenues of $1.9 B, and salaries as a percentage of revenue averaging 56%) it is difficult to motivate staff and leadership toward this goal. Additionally, strategies thus far to achieve the reduction have yielded very small amounts of savings. It is clear that we will need more robust efforts and ideas to realize the total savings target.
