Leading Through a Recession
With few exceptions, healthcare organizations have seen a downturn, due to the recession, in their inpatient census, outpatient visits and corresponding revenues. This has led to even more staff layoffs and ratcheting down of ALL expenses. This recession is a true test in leadership to keep your hospital, system or IDN viable during these perilous times.
As a supply chain leader it’s your job to have a clear vision, credibility and confidence throughout this downturn and to continue to achieve double-digit savings to help fill your organization’s revenue gaps.
Leading through a recession starts with having a plan to cope with the downturn, even with a slashed supply chain budget. I hear some hospitals’ CEOs are asking their MMs to summarily hack off 10% of their supply budget, but that’s not a plan. That’s an act of desperation and extreme anxiety that will too often backfire when the dust settles and everyone has time to take a deep breath!
That’s why a PLAN by definition is a carefully and thoughtfully conceived process of setting goals, developing strategies and outlining tasks and then setting schedules to meet those stated goals to avoid any and all pitfalls. I would recommend that your recession plan should have these three critical elements:
- Benchmarking of all areas of your supply chain operations to determine how much money is still available to be saved at your healthcare organization. The results of this exercise will then become your actual, realistic and obtainable savings goal for your plan, not some arbitrary number picked out of the air by others.
- Develop strategies and tactics to attack each of the areas where you have identified savings opportunities. For example, if your GPO compliance is only 82% and your benchmark indicates you should be at 93% compliance, then develop a tactic to greatly improve this metric.
- Establish a list of tasks, timelines and a person who is responsible for making the identified savings you have uncovered a reality. We like to use a 90-day timeline for all of our projects, unless there is an extraordinary circumstance that prohibits a task from being achieved in this timeframe. In this case, we give an extension on the project for 30, 60 or 90 days.
As consultants, we do this planning exercise that I have just outlined for you, dozens of times a year for our clients, just the way I explained it to you. There is no magic in finding savings, except hard work that ultimately leads to big implemented savings for you.
In this time of stress, anxiety and upheaval don’t take any short cuts in your leadership. This might create even more problems for you down the road or worsen your situation through poor or non-existent planning. Keep on course, on budget and on time with all of your planning to ease your way out of this recession and ultimate recovery!
Your Secret Weapon for 2009
Savings Beyond Price -Weekly eNewsletter – January 7, 2009
Robert T. Yokl
President & Chief Value Strategist
Your Secret Weapon for 2009
I had some time over the holidays to think about how the financial crisis we are now experiencing has affected almost all healthcare organizations’ census, investments and revenues, I came to this conclusion: Hospitals don’t need more patients, investment income or even revenues to be profitable. All they need to do is to become more efficient to be profitable!
This is your hospital’s SECRET WEAPON for 2009 to ensure your healthcare organization’s viability. I can’t think of any hospital that isn’t wasting their time, money and resources. But the good news is that you can cut 7% to 11% from your supply chain budget now if you waste less.
Here are six ways you can waste less in your supply chain in 2009 to survive in these hard economic times:
1. Lock Down Your GPO Contract Compliance
Most hospitals aren’t fully realizing their GPO contract cost benefits (i.e. food, service contracts, paper products, chemicals, physician preference items, etc.) because of their department heads’ resistance to change. This is unacceptable behavior in this harsh economic climate. Now is the time to lock down the compliance on all of your GPO contracts to realize your full savings potential.
2. Attack Your Utilization Misalignments
I can’t think of a better time to attack the biggest waste in your supply chain: Wasteful and inefficient consumption, misuse and value mismatches in your value streams which are costing your hospital 8% to 14% in unnecessary cost. If not now, then when would there be a better time to do so?
3. Shrink Your Inventories to a Minimum
Your hospital needs more and better cash flow than ever before. What better way to do so then to take cash off your shelves in the form of unnecessary and unneeded inventory and put it in your hospital’s bank account?
4. Re-energize Your Supply Value Analysis Program
I haven’t seen a supply value analysis program that couldn’t be renewed to be faster, better and to yield more savings beyond price. To do so you will need to refocus your savings on utilization of the products, services and technologies you are buying — not just on price.
5. Implement a Productivity Management System
If you don’t have productivity standards for all of your supply chain activities and a monitoring system to hold your staff accountable for their efficiency, then you are wasting a whole lot of time and money getting your work done. Remember: What is measured and monitored will improve!
6. Increase Your Use of Technology
There is no better way to cut waste and inefficiency in your supply chain than having technology lead the way. Using faster, smarter and better technology than you have now gives you ultimate visibility into your supply chain, not just using it for your transactions. In 2009 you need search out better technologies that will make your job easier and more productive!
Yes, we all will have a rocky start in this New Year due to our weak economy, but it doesn’t need to be a catastrophe for those supply chain professionals who decide that there is too much waste and inefficiency in their supply chain that now needs to be removed for increased profitability for your healthcare organization.
Your Partner In Savings Beyond Price™,
Robert T Yokl
Chief Value Strategist
Strategic Value Analysis® In Healthcare
800-220-4274
P.S. If you are looking for faster, smarter and better technology in this New Year to give you ultimate visibility in your supply chain, why not “test drive” our Utilizer™ Dashboard for even greater savings yield this year.
P.P.S. Don’t forget to check out my new blog “Why Do You Need a Team Mission Statement?” that will show you how to give your teams a common purpose and a firm foundation for their savings work.
