How healthcare can save 30 per cent on indirect costs

Saving 20 to 30 per cent on indirect costs is within reach for almost every care institution. Minister Hugo de Jonge of the Ministry of Health, Welfare and Sport opened the first national scrapping day in youth care via a livestream last 12 June. The minister repeatedly called on the sector to tackle the administrative burden in care. I concur and see opportunities in making better use of ICT. With proper use of ICT, many care institutions can drastically reduce their indirect care costs - by Jan Bosman - Managing Partner at Improven

A study on indirect costs in care was commissioned by the ministry. It shows that in long-term care institutions, to which I would like to restrict myself for now, the non-client-related care costs exceed 40 per cent. If institutions manage to reduce that percentage by a quarter - and we know from our own experience that this is possible - you can free up a lot of money. Many billions are involved in long-term care, so we are talking hundreds of millions of euros. That money can then be spent on direct care for clients.

Regulatory pressure

The three main reasons for those high indirect healthcare costs are regulatory pressure, inadequate ICT and inefficient work processes. Several studies show this. The administrative burden has increased in recent years mainly because of the rules around accounting for spending. That is the crux of the matter. At the ministry, they are now rightly saying: we are going to scrap unnecessary rules.

The need for transparency and accountability remains. This is a broad societal trend that you also see in other sectors. We spend billions on healthcare and society is justified in wanting to know how that money is spent. This means that the sector itself has to work on the two other reasons for high indirect costs, namely inadequate ICT and inefficient work processes.

Automation

With that in mind, there should be more focus within the sector on using automation. This offers opportunities to achieve additional savings. ICT can be a valuable tool that enables better and more efficient accountability.
I see in our consulting practice that healthcare organisations of an average size use between 15 and 20 different ICT systems to record and report comparable and related data. That means different people in different parts of the organisation, recording the same information in different systems. These are often systems that do not, or do not properly, communicate or exchange data with each other. This complicates information gathering and reporting based on that information.

At medium-sized healthcare institutions, we see that, on average, three to five employees have as a day job correcting or supplementing data manually. Modern ways of data collection and processing are hardly used. By working with digital purchase invoices, for example, administrative processes can be robotised, leading to a more efficient process with fewer errors. Working manually is time-consuming and error-prone. That old-fashioned input combined with the use of different systems creates low-quality information. We have investigated this and we see a lot of errors, even in simple data like phone numbers and addresses. Due to the low quality of information, healthcare institutions fail to see certain developments or worse, they make the wrong decisions.

A coherent system

Institutions can take a look at how data is collected and entered. In addition, it is important to take stock of what systems are in place. For an institution to take effective steps, it must have one good coherent system. Data should also be collected and entered in a standardised way. And institutions need to ensure that staff are aware of the importance of good data. This often means working on the culture in the organisation.

Based on our experience, I think it is time for a standard when it comes to indirect costs. It would be good if there were a benchmark with which healthcare institutions could test themselves. It would also be useful to think about a less financial benchmark, for instance in the area of employee satisfaction with regard to ICT support and work processes. Then it will be easier to see where you stand and what your opportunities for improvement are. How nice it would be if the sector could reduce those 40 per cent indirect healthcare costs to 30 per cent. That means you could spend more of every euro on direct care for your clients.

Also find this article on skipr.co.uk https://www.skipr.nl/blogs/id3917-hoe-de-zorg-30-procent-kan-besparen-op-indirecte-kosten.html

For more information, call or email Jan Bosman (jan.bosman@improven.nl or 06 55 80 18 81)