It seems impossible to avoid stories about rising operating costs. The healthcare sector is not an exception, as compelling data shows hospitals are spending much more than they should. This is why looking at how you can control expenses and reduce costs in the medical space is paramount.
According to the Definitive Healthcare HospitalView, hospitals in the US have reported up to $40 billion in collective surgical and medical supply costs in 2020 alone. These costs include purchasing medical devices, implantable devices, and pharmaceuticals. This places the average spending of each hospital to hit $13 million.
As usual, some of these costs are passed down to individuals who have long complained about rising healthcare costs.
Taking control of your finances in a medical space is no easy feat. To be profitable and scalable, your institution needs to trim expenses.
There are several sources of overhead costs for the continued daily operation of your business. These include supplies, energy, rent, capital charges, property maintenance, cleaning, waste disposal, transportation, and other expenses.
Expense To Profit is a consultancy firm that gives businesses and organizations the tools they need to lower expenses. In our previous article, we discussed How Technology Can Reduce Healthcare Costs.
This article explores the various ways to control and reduce overhead costs in a medical space. Let us dive in.
Hire A Cost-Reduction Expert
One of the effective ways you can control your expenses is to hire a cost-reduction expert. Expense To Profit is a leading consultancy created to bring money back to your business.
Over the years, we have helped businesses to improve their bottom line by significantly reducing their overhead costs. Our strategies are tailored to your business needs, improving how you carry out procurements, pay bills, and take care of operational costs.
We will critically examine your top expense and review your invoices, vendors, and supply costs.
After which, we will provide you with a comprehensive recommendation without sacrificing the relationship with your vendors. 91% of our recommendations are negotiated with your current vendors.
Classify Your Overhead Costs Accurately
One of the major steps of controlling and managing your costs is to keep track of them. You must be on top of the situation and record all your monthly expenditures. This should include your laboratory costs, supplies, salaries, taxes, and any charges paid.
It should be recorded accurately so you can identify all the sources of expenditure and areas taking a huge chunk of your finances. It can highlight areas where you can cut back on expenses, minimizing the funds going out of your business.
If your overhead costs are not accurately recorded, it might impact the effectiveness of cost-reduction strategies and measures. It will also impede profitable investments – as there will be fewer finances to implement them.
Reduce Less Productive Work
After calculating and recording your expenses, you will be able to discover some of the unproductive activities that might be pooling your finances. You can then cut back on these activities.
This might include job roles that are not essential or financially viable. Limiting these roles to be performed on specific occasions might save your medical organization finances which can be repurposed into a profitable venture.
Focus on Maintaining Hospital Equipment
If your medical space has a habit of purchasing new equipment, there might be a maintenance problem. Maintaining your hospital equipment is essential to making it operate seamlessly.
Poorly maintained tools and equipment tend to generate faults over time. They also tend to use a lot of energy, resulting in increased energy bills at the end of the month.
You should hold several talks with the technicians on cleaning the machines before and after use.
Invest in High-Quality Equipment
‘Pricey’ is usually the word to describe high-quality equipment and tools. But their long-term benefits make a purchase worthwhile. It might be expensive to invest in high-quality machines and tools. But they last for a long time.
Having high-quality, efficient equipment can save you a lot of running costs. With several manufacturers going ‘green’ you may enjoy a great deal when you purchase sustainable products and tools.
Review Staffing Needs
One of the recurrent expenses of most medical facilities is payroll costs. When it is essential to keep your workers happy with employee benefits, your organization might be overstaffed.
Take a critical look at your staffing list to identify roles that are not necessary. You can reduce staff size if appropriate to do so.
Order Supplies in Bulk
Another way you can manage your expenses is to order items in bulk. It comes with several benefits you should consider.
For instance, you can secure a discount on several non-perishable items when you buy them in bulk. More so, having several items delivered at once saves you a lot of delivery charges.
With the way global inflation is affecting the costs of medical supplies, buying in bulk saves you from facing increments in prices later.
You can conduct market research for your supplies and conduct a reverse auction with various vendors.
Focus on Staff Training
Training your staff is also essential to cutting costs in your medical space. When your workers are properly trained, energy and waste disposal will be slightly reduced. You can simply educate them on the need to put off equipment when not in use.
You can also establish some staff rules to trim down expenses.
Often times business leaders get lost in the day-to-day operations of just running their business. This is commonly how expenses start to creep up into untenable levels and those in the medical space are not excluded from this.
Expense To Profit is a leading expense reduction firm dedicated to providing insights, recommendations, and strategies to reduce expenses while boosting revenue. You can reach out to us to better understand your business needs and goals and design strategies to help you.
Published by Marc Freedman
Marc currently serves as our Chief Cost Evaluator, expertly advising our client management team on how to help you successfully achieve your business and financial growth goals. A respected mentor to all he consults with, he is an avid collaborator and contributor to the spend consultant community, guiding thought leaders to formulate, design, and install the best operational solutions available to their clients.