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Human Resources

Simple Changes for Big Cost Reductions

simple changes yield big cost reductions

Looking for cost reductions, a community hospital in a small town in the Midwest turned to its employees. Through a new-idea campaign, the hospital was able to achieve cost reductions of almost $90,000 a year.

Simple Campaign, Big Cost Reductions

The event was a bottom-up employee involvement program that mobilized the entire staff to find cost reductions.

Workers were asked to find ways to save a few dollars a year. Over 30 days, 97 employees submitted 442 ideas for cost reductions.

By implementing about half of the ideas, the hospital was able to realize over $88,000 in annual cost reductions. The biggest idea involved revamping charge forms for operating room, outpatient surgery and emergency room services, which, alone, resulted in $30,000 in savings.

Another $58,000 came from 220 other simple ideas such as these:

-Placing bigger trash receptacles outside exits where workers gather to smoke. Maintenance was spending too much time cleaning up cigarette butts from these areas.

-Installing sensor lights that are activated when people enter an area. Emergency room lights used to be left on 24 hours a day. Now lights switched on only if people are in the area.

-Using both sides of nurses’ notation forms. It’s less wasted paper, less paper to handle and fewer bulky files.

The hospital’s overall investment in the program was a bit over $2,000, and it netted a 44-to-1 return on investment in the first year alone.

Bonus: Boosted Employee Morale

Better employee relations is one boon of this kind of simple effort that doesn’t show up on the balance sheet. Employees often feel better because management is taking their ideas seriously.

At the hospital, the campaign’s director divided the staff into eight teams of 10 members each. For the first idea submitted, a worker received a recognition mug. Every week, the worker who generated the most ideas received a low-cost award. Friendly competition between teams fostered a spirit of enthusiasm.

In a similar campaign, Pepsi found $1 million in cost-saving ideas. Interviewed on this success, the Pepsi folks didn’t focus on the savings, though – they kept mentioning the improvement in morale.

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