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Key Steps to Define an Achievable AND Deliverable Budget

  • Have you ever been handed a savings target dollar amount and been told you need to deliver that by year end?
  • Did hard data drive the target to understand what is truly attainable and deliverable?
  • Do you understand what a realistic percentage of that target can and should come from purchased/ support services?

Below are clear guidelines which will allow you to set-up your support service department(s) for a successful 2020 budget year.

PREPARE: Things to consider

As preparation for your budget begins, start with a solid understanding of your overall strategic objectives. Is it to reduce the total operating budget by 5%? Decrease inventory or labor? Increase retail and purchasing rebate revenue?

If you are currently outsourced in any of your support service departments:

  • Are you happy with the current provider?
  • Do you want to consider pros and cons of moving to an in-house program?
  • Do you have visibility and transparency for the total cost of service and do you understand if your provider is making a fair and reasonable profit?

You would be surprised how often the answer to this is no.

If you are an in-house program, when is the last time you compared your labor and non-labor cost to like size organizations? Do you have the innovation or access to resources that can implement best in class programs, process and protocols? Is it time to have a quick assessment to insure you are operating as efficiently as possible?

Do you fully understand where you can reduce cost and/or inventory or off-set the risk to a 3rd party? Do you have a clear understanding of contract terms and associated amendments or are you making assumptions that your providers aren’t benefitting from a lack of contract management and associated scope creep?

It is not uncommon for daily responsibilities from keeping you from looking at your department(s) holistically. As staff and management turnover is prevalent in healthcare, it is easy to not be as prepared as you should be to best set up for next year’s success and budget.  With a solid understanding of where you are today and where you want to go; a true unbiased, third party assessment can uncover operational and quality gaps and define the financial opportunity to deliver to a set budget.

CHALLENGES: Industry drivers

Healthcare consolidation is happening at a record pace. Mergers and acquisitions are driving standardization and the ability to create shared platforms. While the integration of two or more organizations can open the door for opportunity, wrapping your arms around data needed to make informed decisions can be complicated.

Below are a few introductory questions that can assist you in building the best plan, as it relates to the integration of a new entity:

  • What are the big bucket items that can drive the most significant return in the shortest amount of time?
  • What longer term strategies can be incorporated to become more accountable for the financial and operational health of your support service departments?
  • What quality indicators should be better managed to help realize all reimbursement opportunities or best avoid re-admit penalties?

Inaccurate assumptions can also lead to issues in your organization. If the assumption is that you should be able to drive a 10% reduction out of your Food program, and the focus is strictly on cost, quality may be severely impacted; which in turn can have a direct effect on patient satisfaction scores.

An operational assessment can validate savings opportunities and ensure that recommendations are NOT at the expense of quality, employee engagement, or patient satisfaction.

There is a fine line to toe to ensure you are running an optimal operation at the best cost.  Lack of resources may also contribute to a missed budget or identified opportunity. 

Change is the only constant and it can directly affect projects from progressing and financial benefits being realized. Having subject matter experts perform a detailed financial and operational review and become as an extension of your existing team for implementation can be the change agent needed to stay on task and deliver the dollar.

The Soriant Solution

With an assessment, Soriant can define the total opportunity in a detailed report in about 4-6 weeks. The holistic process looks at:

  1. Defining cost-reduction goals based on the organization’s financial performance
  2. Using internal and external benchmarks to identify possible sources of savings
  3. Understanding and focusing on the key drivers of expenses
  4. Drilling down on the relationship between maintenance demands and staffing methods
  5. Streamlining overhead functions and purchased services
  6. Ensuring that cost-reduction targets are integrated with organizational plans, budgets and quality objectives
  7. Facilitating the achievement and sustainability of cost reductions through a highly disciplined, proactive use of lean project management processes

Soriant’s hospital consultants specialize in non-clinical support services:

  • Laundry/Linen
  • Food & Nutrition
  • Environmental Services
  • Energy & Utilities
  • Telecom
  • Patient Transport
  • Security
  • BioMed Facilities
  • Vending

As you prepare your budget for the upcoming year, let a detailed assessment define achievable savings so the budget doesn’t define your workplan. This puts you in the driver’s seat and gives you visibility into the levers you can pull to best deliver your strategic plan and the dollars to the bottom line.

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