Overhead Costs

Why Managers Should Care About Overhead Costs in a Hospital

It’s an understatement to say that managing a hospital or other large medical center is a demanding job. There are hundreds of operational parameters to consider every moment of every day, from staffing concerns to stocking proper levels of pharmaceuticals, personal protective equipment, and more. You even need to have a policy in place to deal with linen management.

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Successfully navigating all of this results in plenty of overhead costs. For many hospital management personnel, high overhead has become a simple fact of life, an unavoidable necessity of being a modern large-scale healthcare provider. Yet this doesn’t (and shouldn’t) be the case. On the contrary, a hospital that employs a strategic cost management process to reduce overhead can create a more productive healthcare facility that operates efficiently and effectively, leaving patients with a positive experience. And in today’s consumeristic healthcare world, it’s all about the patient experience.

Managing Hospital Overhead Costs Doesn’t Have to Be a Losing Battle

Doctors Talking About the Overhead Costs in Their Hospital

While we’re not suggesting any hospital manager completely ignores overhead costs, the prevailing wisdom can often be fatalistic. An approach of “it is what it is” means that general cost-saving measures may certainly be implemented, but nothing truly targeted or comprehensive is often considered because the costs of running a hospital tend to be accepted as unavoidable.

However, it is feasible to tackle overhead costs in ways that don’t feel like a losing battle. The key to strategic cost management in hospitals and healthcare facilities is a specifically targeted approach to core costs that aren’t associated with staff payroll and focus on delivering high levels of service to both staff and patients — at a price that can help reduce overhead costs.

Sound impossible? Read on.

One Approach: Outsourcing Service and Supply Services

A Nurse Takes a Scrub Out of the Scrubvault

Certain things need to happen to keep a modern hospital functioning properly. Bed linens must be cleaned, PPE supplies must be restocked, staff must have fresh scrubs, etc. However, one of the best ways to reduce your direct costs, and therefore your overhead, is to outsource as much of your service and supply needs as possible – as long as you team up with a partner that has the skills and expertise to provide these services to your hospital.

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A cost comparison often reveals that the fees these third-party organizations charge for their services are often more affordable than a hospital taking on these responsibilities itself. Service companies have the specialized knowledge and staff necessary to get the job done quickly, efficiently, and at a price point that will shrink your overhead in the long run. Let’s get into some examples.

Linen Services: An Example of Partnering

An ImageFIRST Associate Puts Linen onto a Customer's Shelves

For managers concerned about hospital overhead costs, partnering with a linen service is an excellent solution.

Linen services, which involve not just cleaning things like hospital bed sheets but also patient gowns, towels, cubicle curtains, scrubs, mops and buckets, lab coats, and even clean and soiled linen storage, is a large source of overhead for a typical hospital or other large health centers. A hospital that handles cleaning and distribution of all their linens internally often incurs huge costs. Linen inventory management, in a nutshell, is an expensive and time-consuming proposition; training staff on proper linen management and dedicating them to that role when they could be doing other tasks can drive up costs and can reduce overall service levels to your patients.

Yet look at the many benefits that outsourcing your linen inventory management to a qualified provider can bring. First, your staff is free to focus on other areas of hospital management or patient care, instead of being bogged down with managing hospital linens themselves. Second, inventory levels are monitored much more carefully by a team of experts, ensuring that you don’t overpay for too many linens or find yourself without enough. Take scrubs as another example — nurses don’t want to have to purchase and launder their own scrubs, or arrive to a shift and find there aren’t fresh scrubs available. An experienced inventory management partner, such as ImageFIRST, will ensure fresh scrubs are always available and have been laundered with an infection prevention process that meets or exceeds OSHA, CDC and HLAC standards and complies with The Joint Commission requirements.

Finding a Good Partner for Outsourcing Services

While it’s very possible to strategically reduce overhead costs by outsourcing many hospital support services to an external company, this method will only be cost-effective if you partner with an organization that is equipped to do so successfully. This makes it crucial to find a company that has the ability to perform up to your specifications consistently and reliably, one that has a strong track record for delivering results at an affordable price point while anticipating your needs and adapting its services to those needs.

What Makes ImageFIRST Stand Out?

ImageFIRST performs linen and laundry services exclusively for the healthcare industry, ensuring we understand exactly what hospitals and other medical facilities need to lower overhead. Our dedication to individual facility needs (including a dedicated Customer Advocate responsible for monitoring your inventory and picking up and delivering your soiled and clean linen) helps us retain more than 97 percent of our customers.

Such an approach to medical linen and laundry solutions will help enable your healthcare facility to offer uncompromising patient and staff services while helping to reduce hospital overhead, improve staff morale, and elicit high patient satisfaction.

Have questions, or want to learn more about strategic cost management and lowering your hospital’s overhead? Enter your zip code below to talk to us about a free estimate for a fully managed program.

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