Developing cost awareness at the bench.
The drawback is that the planning doesn't include direct input of ideas and efforts from the bench staff. Overlooking this valuable resource is a mistake: No lab cost containment campaign can be 100 per cent effective without technologists' contributions.
Recognizing the role my 14-member hematology staff could play, I devised a plan to promote cost awareness at the bench. The goals were to instill a cost containment attitude, provide the necessary financial information to build awareness, and then make it an expectation that staff members practice cost containment on a daily basis--from avoiding waste to suggesting more economical ways of doing things. The plan, of course, augmented other laboratory cost-saving programs.
We implemented it last fall, and it has really taken hold. During the first three months of 1984, average monthly hematology expenses ran $8,000 below the same period in 1983. Quarterly test volume was approximately the same in both years. The financial savings reflected both an upgrading of instrumentation and the impact of our cost containment program.
Presenting unit cost information, along with the bottom-line product costs, has probably been the single biggest factor in our success. (Figure 1 shows a breakdown of the 1983 unit costs for common hematology supplies.) Technologiests normally don't see such data. For example, the hematology staff was amazed to learn that a three-month shipment of latex for fibrin split products cost us $2,500.
Two key events led to this consciousness raising. First of all, I spent several months last year preparing the section's 1983-84 budget. Then I attended a one-day continuing education seminar on "Fundamentals of Cost Control for Health Care Professionals." These events made me see how removed technologists are from laboratory economics and how important it is for them to understand our operating costs.
I didn't become involved in budgeting myself until the lab manager began delegating it at the section level to chief technologists a few years ago. It took two or three annual budgets before I learned enough to explain the process to others, and even then I never thought to ask technologists for suggestions. When the CE seminar reminded me that those closest to the work generally have the best ideas for improvements, the cost awareness plan was born.
Before discussing the specifics, let's look at three guiding rules:
1. Cost containment is an attitude, a new way of living. It must first be developed by management, then passed on to the staff. With this attitude, it's virtually impossible to ignore costs.
2. Knowledge of unit costs is basic to cost awareness. Too often, that information remains management's secret. Once our staff members realized latex cost more than $1 per drop, they were much more careful about spills and more conservative about repeat testing.
3. The best suggestions for cutting costs come from the bench. No one knows the supply and demand aspects of testing more intimately than technologists, and they have definite ideas on how to do the job more efficiently and economically. All we have to do is ask.
Figure II outlines our cost awareness plan in broad strokes. Here is an elaboration of each point:
* Present the principles of cost Containment. During the first few monthly section meetings that incorporated cost awareness as a topic, I simply shared what I had learned at te CE session. Though extremely basic, much of this information proved enlightening to the technologists--as it had to me.
Outward appearances, for example, can be deceiving. Because we are in an affluent suburban community and our medical center has made an effort to create an attractive environment, technologists could easily assume there's no need to economize. The fact is, the hospital does not have a large surplus. It cannot afford waste in any amount.
Individual awareness and action are absolute musts to reduce costs. If one technologist is wasteful, others are apt to follow suit. Conversely, when a cost-conscious employee sets a good example, his or her actions are likely to rub off on co-workers. DRGs have made cost containment part of evry laboratorian's job.
Avoiding waste reduces operating costs. Waste can take a wide variety of forms, adding up to a great deal of money. Consider the following types of losses:
Time. Delays can foul-up work flow and productivity--the laboratory gets less for its money. Misguided priorities and a staff that's idle for any reason also inflate costs.
Materials and supplies. Waste here is literally money down the drain. Spoilage due to outdating is a big problem. When it occurs, we must not only replace the material, but also may pay more to do so. Purchasing a wrong or inferior product, maintaining an overly large inventory, and using a mor expensive item when a cheaper substitute would do the job pump up costs. Other examples include improper usage--in adequate mixing or leaving quality control material at room temperature for too long--as well as carelessness and breakage.
Instruments. When an instrument breaks down, possibly because of improper maintenance, the downtime can waste wages. Then the lab may have to pay time and a half to catch up on testing once the instrument is fixed. Sometimes it's necessary to switch to a more costly alternate instrument or procedure. When malfunctions are not reported and corrected promptly, it takes longer to complete the work, and results could be jeopardized.
Space. Overcrowding can also limit a lab's capabilities. Technologists obviously can't perform at peak efficiency if they're bumping into each other. This is a real problem in our Stat lab. If we had the space for an additional microscope, we could get test results out faster. Unfortunately, the room is extremely small, and there's no way to solve the problem right now.
Personnel. The laboratory loses money each time technologists are not fully occupied or fail to use slack time productively. As for starting work late, quitting early, and abusing sick leave, that all amounts to time theft, Supervisors must stay on top of these situations, or they will quickly lose control. But peer pressure is especially effective, too. No one wants to work twice as hard to cover for a lazy colleague.
Individuals must get into the habit of questioning their work methods. Just because something has always been done a certain way doesn't make it the best way. Here are the kinds of questions that should be raised:
What can we simplify? To save time and unnecessary manual testing in our section, for example, we abbreviated procedures for responding to the WBC backlight alarm on the CBC analyzer.
What can we combine? We find that holding joint safety and section meetings saves time and is less disruptive to the work flow. At the bench, we combine two work stations on lighter days, to use the staff more efficiently.
What can we eliminate without affecting quality? Our section streamlined the paperwork necessary for follow-up on errors and also reduced the number of differential repeats required in the event of delta failure. Neither measure has affected the quality of testing.
Can we change the sequence to improve efficiency? Instead of cleaning the CBC analyzer aperture each morning, we now do it at the afternoon shutdown. This allows us to get up and running by teh time the morning batch of blood specimens have all arrived.
* Present unit cost information. All data presented are included in section meeting minutes, for technologist reference. Whenever appropriate, I project monthly and annual totals so that technologists understand the magnitude of expense involved. This knowledge enables them to select supplies more cost-effectively when more than one item will do the job.
for example, the 4 x 4 gauze squares we use to wipe off microscope lenses and the aspirator on the CBC analyzer cost 3 cents. We keep stacks of these squares throughout the section, and it's easy to grab one to wipe the bench instead of using a paper towel that costs less than 1 cent. Now that technologists realize how quickly the difference adds up, they treat the gauze with new respect. When they can, they use it more than once on microscope lenses or opt for 2 x 2 gauze squares. By using more 2 x 2s and fewer 4 x 4s, we saved approximately $500 over a six-month period.
I also discuss the cost of various instrument parts and point out whether the parts are covered under service agreements. Unless told otherwise, technologists assume that service contracts take care of everything. This can be an expensive misconception. For example, the bath for the CBC analyzer costs $200 to $300. During weekly maintenance, after the baths were cleaned and restored to the instrument, they would sometimes require repositioning. If technologists screwed a bath in too tightly. It would crack, and we were out the cost of a replacement. That doesn't happen anymore.
* Have an expert explain third-party payment policies. Last fall, the hospital's budget director and a systems analyst discussed Medicare's prospective payment regulations with the hematology staff. To make sure everyone benefitted from their expertise, I taped the session for absentees.
Although I had become familiar with the ins ad outs of prospective payment, this meeting marked the first time most of the staff heard about the system at length. This was evidenced by comments during the question and answer period. For example, they thought a patient's diagnosis would be established upon admission. Obviously, many patients are hospitalized specifically to determine the diagnosis. Our hospital has just come under DRGs as of July 1, but technologists have had plenty of time to get used to the idea and accept the necessary changes.
* Present monthly budget summaries. I place all the financial data on the blackboard at our monthly staff meeting, discuss our progress, and then distribute copies of the minutes. i also submit essentially the same report to the laboratory manager (Figure III). This brief update covers actual and budgeted test volume, revenue, and costs or expenses.
During the presentation, I note individual expenditures for such high-cost categories as reagents and QC materials and highlight unusual expenses for the month. We also compare inpatient and outpatient revenue. Here, I might emphasize that $1 million in billings doesn't necessarily translate into that much revenue. Technologists are also learning that outpatient testing--25 per cent of our workload--is far more profitable now that DRGs are upon us.
In our session, we discussed variance, or the difference between our actual budget performance and what we had forecast. I tested their comprehension by asking whether the variance for certain items was favorable or unfavorable.
The financial discussion accounts for only a small portion of our regular monthly meetings, but it keeps technologists current on the progress of cost containment measures. For example, they discovered how much costs dropped when the section purchased a new CBC analyzer that also performs platelet counts. Apart from the increased efficiency, we were now maintaining one instrument instead of two and using less reagents and smaller amounts of QC materials.
Another benefit of the financial reports is the continuous exposure they give technologists to the costs of running the section. As long as staff members are thinking about our expenses, they will look for ways to trim fat.
I also provide information beyond the unit costs. The latex for fibrin split products and the price of acquiring and maintaining instruments are two common examples. The cost of our glass slides was another eye-opener. The techs were very surprised to learn that these seemingly modest items, which cost only 4 cents apiece, add up to $1,200 for a three-month supply.
* Evaluate attitudes toward cost containment. Since attitude is the key to this plan, it's important to periodically assess where technologists stand. I am in the process of instituting a verbal quiz during annual performance appraisals and will base my evaluations partly on how well they answer such questions as:
1. What is the unit cost of these laboratory items? Here, I select several commonly used hematology products. Technologists should know most of these costs just from attending the monthly section meetings.
2. How have you reduced the usage of specific laboratory items during the past year? Usage may be reduced either by ending waste or substituting a more economical product or procedure. For example, technologists no longer use lob forms when they need scratch paper, and some have even taken responsibility for keeping a ready supply of recycled note paper in the section.
3. What cost-cutting suggestions have you made to your supervisor in the last year? We have adopted many such suggestions. For example, by dispensing smaller amounts of reagents that must be replaced weekly, we have cut back considerably on wastage. In addition, several technologists pointed out that we could save both time and money if we switched all our micro CBC specimens to the analyzer that doesn't require dilutions.
4. If a mixing chamber or bath on the CBC analyzer breaks during weekly maintenance, is the price of the replacement covered by our service agreement? What is the approximate cost of this item? Because of the outlays involved, I make sure technologists are well aware of what we spend for parts and maintenance. To take one instance, they are much more careful with the microscope objectives now that they realize how much they cost to repair or replace.
5. Which of the following supplies have expiration dates--pre-filled dilution vials, microcapillary pipettes, pipette tips, glass slides, lysing reagent, normal saline, and reticulocyte stain? Incidentally, since raising the technologists' cost consciousness, they are now more likely to come and tell me when something is due to expire.
6. Does it always save money to buy a cheaper brand? Why or why not? The entire section learned the hard way that buying cheap can be expensive. We found that bargain printout cards for the CBC analyzer didn't work and caused frequent printer malfunctions, and generic pipette tips were often too short to reach the sample,. We also switched to more expensive microscope slides because they didn't need to be cleaned before usage. The time savings and reduced staff irritation more than justified the extra cost.
Since cost containment attitude and performance should be evaluated on a continuing basis, I'm constantly looking at new ways to assess awareness. This evaluation criterion carries over when I make hiring decisions.
* Follow up to determine the plan's success. Although I haven't done a formal review of the program. I have been comparing some statistics from the section's monthly cost center report with figures from the previous fiscal year. In calculating the average cost/test and the cost difference for selected items, I can see that we're making progress. The results of evaluating the staff's cost containment attitude will also serve as an index of success.
Staff enthusiasm is probably the best indicator of commitment to the plan. I now have a senior technologist help me move the hematology budget through the various channels during the year, and there's a waiting list of future budget assistants.
As a result of our program's impact, the laboratory has established a cost containment committee consisting of technologist representatives from all sections. I will serve as an advisor.
I have no doubt the labwide program will also succeed. In my experience, technologists find this information interesting and wonder why they didn't learn it sooner.
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|Author:||Yapit, Martha K.|
|Publication:||Medical Laboratory Observer|
|Date:||Jul 1, 1984|
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