 Definitions.

 Essentiality, challenges and ways of achieving it?

 The global scenario.
 Improvement areas of hospital :
i. Infrastructure.
ii. Operations.
iii. Information technology.
iv. Material management.
v. Finance.
vi. Human resources.
vii. Marketing.
 Summary
Cost Containment :
A detailed plan and process of maintaining organizational cost and
purchased prices within certain specified target limits over a
period of time.

Cost Avoidance :
An effort to prevent or reduce supplier price increases and ancillary
charges through the use of value analysis, negotiations, and a
variety of other techniques.

Cost reduction:
A reduction in the costs incurred by an organization which has
tangible results; i.e., a reduction in outside spend and/or the
availability of funds that can be used for purposes other than
originally intended.
 Rising material cost.
 Increments for staff.
 Less availability of manpower.
 Requirement of star players.
 Other increments: electricity,.etc.
 Quality : Accreditation.
 Reduction of income:
- Government schemes trying to cap bills.
- Poor reimbursement rates.
- Hospital only source of revenue is patients.
All hospitals are faced with challenges in today’s economic
climate.

These include:

1. Containing spend and reducing costs are the highest

priorities.

2. Accomplish this containment and reduction with less help.

3. Achieve results without jeopardizing on quality.

4. Targets need to be achieved in a timely manner.

Accomplishing these cost containment and cost reduction
objectives requires:

1.Experience.

2.Functional Knowledge.

3.Strong project management.

4. Correct business analysis skills.

5. Ability to effectively manage the change and make it stick.

 There are four key areas where providers need to
focus to succeed:

1. Be clear about the patients to be served and the

business model.
2. Have highly efficient processes based on
standardization and flow.
3. Develop models for workforce, technology,
buildings and logistics that drive quality and
lower costs.
4. Create systems to manage this and drive
continuous improvement.
1. Infrastructure.
2. Operations.
3. Infrastructure
4. Material management.
5. Human resources.
6. Finance.
7. Marketing.
 Building orientation and structure.

 Scope for change and adaptability.

 Layered hospital:
1. Hot floor
2. Hotel
3. Office
4. Factory
 Design approaches

• Minimizing waiting and circulation space.

• Limiting the number of different room
types in favour of adaptable rooms to
reduce patient transfers (which increase
delays and costs).
• Reducing the use of water and energy
and using sustainable sources of energy.
Hospital Energy Expenditure
 Devolved management with flat structures.
 Deployment of lean techniques to
eliminate waste and maximize quality.
 Strong governance with and independent
knowledgeable oversight by a properly
qualified board.
 Measurement systems.
 The ability to compare performance
against others so learning can be adopted
from elsewhere
Strong relationship between a number of
factors and effective management practices:

• Competition helps to improve managerial

standards.
• Having senior, clinically qualified managers
improves results.
• Larger hospitals invest more in management
and appear to be better managed .
 Developing the right set of metrics and
reporting standards .
 Real time availability and having the
competences to interpret and act on this
information.
 Willingness to prototype and pilot new ideas.
 Business intelligence models.
 Healthcare IT.
 Proper inventory control:

1. Setting up of various stock levels:

a) Re-ordering level.
b) Maximum level.
c) Minimum level.
d) Avg stock left.
e) Danger level.
f) Economic order quantity.
2. Preparation of inventory budgets.
3. Maintaining perpetual inventory system.
 Inventory Turnover Ratio:
(a) Slow moving Inventories.
(b) Dormant Inventories.
(c) Obsolete Inventories.
(d) Fast moving inventories.

 ABC analysis.

 Just in time.

 Planned preventive maintenance.

Revenue cycle management
 Improve the working capital management:
i. Maintaining efficient levels of both components
of working capital, current assets and current
liabilities, in respect to each other.
ii. Ensures a hospital has sufficient cash flow in
order to meet its short-term debt obligations
and operating expenses.
iii. The two main aspects of working capital
management are ratio analysis and
management of individual components of
working capital.
 Planning level rational assessment of manpower
requirements by WISN (work load indicators of staffing
needs):
1. Determine how many health workers are required to cope
with actual workload in a given facility.
2. Estimate staffing required to deliver expected services of a
facility based on workload.
3. Calculate work load and time required to accomplish tasks
of individual categories.
4. Compare staffing between health facilities and
administrative areas.
5. Understand workload of staff at a given facility.
6. Fair workload distribution establishment amongst staff.
7. Assess the workload pressure of the health workers in the
facility.
 Marketing strategies.

 Camps.

 Using the social media.

 Display of educational material.

 H
ƒ ealthcare costs are increasing and cost growth is
speeding up
 Tƒraditional cost containments strategies can cut costs but
won't slow cost growth.
 Cƒ osts should be contained at the healthcare system level
by:
–Containing technology adoption, the most important factor
of growth.
–Containing hospitalization costs, the most important spend
area.
Costs can be contained at the hospital levels by:
ƒ
–Improve clinical staff efficiency .
–Outsourcing of non-core functions.
–Excel in operations.
–Adopt IT.