Employees as Cost-Cutters

Philip Betbeze, for HealthLeaders Magazine , July 10, 2009
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After looking at Banner's cost structure, Fine and his lieutenants came up with estimates on "what we had to do to reposition the organization for 2009," he says. Banner was acquiring a two-hospital system and projected reductions in revenue from federal programs and state Medicaid programs.

In addition to debt refinancing at the end of last summer, "right before things got really bad," Fine says, Banner froze any merit pay raises for hundreds of people in upper management, but didn't freeze raises for lower levels in the organization. That showed that management was taking a hit from which the lower levels were protected, says Fine, and boosted employee morale and their efforts to find cost savings.

"Employees know more about this organization than we do," he says, offering as an example that reevaluating how Banner utilizes its Web site for content placement reduced printing costs by about $75,000.

Further, many Banner hospitals were trashing meals because they had gone beyond the warming time they were allowed. The solution focused on the process of delivery, which was going through too narrow of a checkpoint and creating backups.

While Fine isn't sure how much was saved in the process, he notes that the effort led to improved patient perceptions and patient care. Still, he cautions that employees are not a panacea to hospitals' cost problems and using their suggestions exclusively could backfire.

"You can't keep going back to the well," he says. "Employees have to feel safe and secure. If you're constantly saying things have changed, it puts employees in a position of risk and kills morale."

Philip Betbeze is senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com.
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