Impact Insights

A-Hunting We Will Go… for IT Cost Savings!

Susan Kruzan

Healthcare organizations today are feeling the heat to do more with less, and IT departments are not immune to this issue.  The days of creating this year’s budget by using the prior year’s budget plus an escalator are, for the most part, in the past.

Cost Saving Season

Whether it’s to free up dollars to fund the organization’s future technologies, a mandated reduction in costs across the board, or belt-tightening as a result of a merger or affiliation, it’s a reality facing most healthcare IT organizations.  The good news is, there are many places to look when hunting for savings, from staffing to maintenance to telecommunications.  The following seven tips will help you in your quest to find those rascally dollars.

  • Treat the “Hunt for IT Dollars” as a structured initiative, including a projected meet or exceed dollar goal, timeline, project plan, and assigned resources. This will lend further legitimacy and accountability to the effort.
  • If a sense of urgency isn’t already present, create one. Consider offering an incentive program for staff to identify legitimate savings opportunities.  Work with your Human Resources department to develop a program that is creative yet works within the constraints of the organization.
  • Elicit the help of the Finance and Legal departments to get a deeper understanding of current and projected costs and contractual considerations. Who better to ask than the people who pay the bills every day to help identify where the money is being spent?  Use the 80/20 rule to identify key areas of focus within the IT budget.  Involve Legal as needed to understand contract language or renegotiate contracts.  
  • Track each identified savings opportunity. Categorize the opportunities, such as near-term (0-3 months), intermediate (4 – 12 months), and long-term (greater than 12 months).   If there are items that are off limits, identify them and document the reason why they should not be reviewed for savings.  Identify items where either capital or operating dollars will need to be spent in order to achieve the savings.  For example, if two systems are used for the same functions, look to sunset one application but know that it might require capital and one-time or ongoing operating dollars to archive the sunset application.
  • Use existing IT governance structures to vet opportunities. IT governance can help to prioritize opportunities and focus energies on those that will reap the biggest savings. In addition, be prepared to seek council within the governance structure when a decision will impact areas outside of IT, especially those that will impact support of end users or determine what systems they will use.  Sponsorship will be key, as those projects are often difficult and might upset the status quo.
  • Track the savings realized for each opportunity. Analyze expenses each month to ensure that expected savings are realized.  Hold resources accountable to ensure that projects designated to save dollars are enacted on time and on budget.  For example, failure to give timely notice for a sunset software maintenance product might result in an automatic rollover of maintenance fees, most likely for one or more years.
  • Keep the “Hunt for IT Dollars” initiative going. Add a project update to your IT leadership discussions and celebrate the successes!  Technology changes frequently, providing opportunity to continuously re-evaluate technology, platforms and how they are supported and serviced.

These days in healthcare, it’s always “Cost Savings Season.” Happy hunting!

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