Becker's Hospital Review

36 9 Ingenious Ways to Cut Costs at Your Hospital (continued from page 1) routinely be overlooked are shipping costs. Mark Bogen, CFO of South Nassau Communities Hospital in Oceanside, N.Y., says a few years ago, his hospital's inbound shipping costs averaged around $500,000 per year. However, South Nassau saved $75,000 simply by leveraging its buying power with carriers. "The problem is [shipping] doesn't get separately coded, and it gets buried in hospitals' general ledger, so you don't have a good idea of how much you're spending on in- and outbound delivery," Mr. Bogen says. "But you need to take advantage of those situations where vendors are having difficulties closing sales. If they ain't crying, we ain't buying." Furthermore, hospitals can save thousands by reducing overnight shipping for operating room supplies, he says. 2. Implement a wellness and disease management program for employees. Laura Zehm, CFO of Community Hospital of the Monterey (Calif.) Peninsula, says she and the rest of her peers have consistently asked themselves how they can find innovative ways to save money at their 284-bed independent hospital. In 2008, they turned their attention to the hospital's health benefits plan, which increasingly ate up more of CHOMP's budget. "I found myself sitting at board meetings saying, 'Yeah, healthcare costs are going up, employees are getting older, but there's nothing we can do about it.' That's something you never want to say to your board as a CFO," Ms. Zehm says. Finance & Revenue Cycle CHOMP turned to the Asheville Project as a model to implement a new wellness and disease management program for its employees. The Asheville Project was an effort by the city of Asheville, N.C., a self-insured employer, to provide better oversight and education to its employees for chronic health problems, such as diabetes and asthma. Ms. Zehm says employees receive financial incentives in the form of lower health insurance premiums if they are active participants in the wellness program and complete or show improvement in tasks in five main wellness categories. For example, if a diabetic employee enrolls and participates in diabetic coaching and gets his or her biometrics checked, the individual's health premiums will go down. Many other hospitals and health systems are engaging in these types of wellness initiatives, and there are significant savings to be found, Ms. Zehm says. In 2009, CHOMP's per-member, per-month health costs were $705.65. In 2012, that figure dropped almost 15 percent to $602.25 per member per month. "We're making it easier for employees to [take care of themselves], and it has saved us millions of dollars per year," she says. 3. Improve landscaping irrigation. Many hospital CFOs and financial leaders may feel like they have hit a wall when it comes to finding new cost savings. There are only so many items and processes that can be cut or altered, right? For Kay Winokur, RN, vice president of quality, safety and accreditation at Beaumont Health System in Royal Oak, Mich., that simply isn't true today. Ms. Winokur, who also is a LEED green associate, recently helped Beaumont create "kaizen" teams specific to energy and water reduction opportunities. "Kaizen" translates to "improvement" in Japanese, and Beaumont's kaizen teams — which are all led by various Beaumont employees — scour the main campus every month to find quick and sustainable savings. One of the first initiatives from Beaumont's kaizen teams was to redirect and cut back usage of the health system's irrigation system. "With our landscaping, we found some plants that we removed and perennial plants that were dying anyway, but we were still watering [those areas]," Ms. Winokur says. "So we turned off the sprinklers in the area, and that saved 500,000 gallons of water every year. Unless you go out and walk, you won't notice these things." In addition, the teams changed out sprinkler heads on two of Beaumont's campuses to low-flow models, which saved more than $180,000 during the six-month watering season. 4. Remove and reduce lighting. In recent years, Beaumont has committed to investing in energy efficient lighting and fixtures. While this may seem like a financial drain instead of a balance sheet saver due to the initial upfront costs, Ms. Winokur notes she and her teams found ways to reduce inefficient lighting with little to no cost at all. At Beaumont, leaders have reduced the number of bulbs in multiple-light fixtures where possible, eliminated unneeded lighting in areas like chart racks that are now digitized and installed switches in rooms and areas where lights do not need to be on at all hours of the day. On average, lighting costs are 16 percent of a hospital's total energy consumption, and switching to different lighting can save hospitals and health systems tens or even hundreds of thousands of dollars every year. For example, Chicago-based Resurrection Health Care is saving $900,000 every year just by making the switch from high-energy lamps and ballasts to more efficient ones. 5. Revamp the chilled water system. Hospitals have a lot of responsibility when it comes to keeping the patient environment safe and sterile, and chilled water systems — which are the backbone for air conditioning — play a central role.

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