delivering efficiencies in the healthcare sector...2 at the forefront of the covid-19 crisis, the...
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Delivering efficiencies in the Healthcare Sector
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Healthcare Solutions
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At the forefront of the Covid-19 crisis, the healthcare sector is struggling to breathe new life. No sector has been more directly affected by the Covid-19 than the healthcare sector which had to quickly adjust to the crisis.
Within ERA Healthcare solutions, we are providing support to hospitals and care homes and have experienced first-hand the challenges they were facing and will continue to face in the near future.
Hospitals had to completely restructure their operations to give priority to Covid patients and stop non-essential, sometimes very lucrative, activities. They had to procure protective equipment at very high prices and buy new machines (e.g. breathing equipment). This was combined with lots of overtime work from highly dedicated employees.
Those high activity levels however, did not offset all the losses in non-essential activities nor the additional costs.
Today all activities have resumed, but it is certainly not back to normal. Additional protection measures have to be taken which increase costs, slow down activities and reduce staff numbers.
Hospitals have received support from public authorities, but long-term issues remain and cost reductions that have been left aside during the pandemic will have to be reactivated more actively than ever.
Elderly care homes were also very much impacted due to their residents being most at risk of the virus. As found in our recent survey, their main concerns related to the cost and availability of protective equipment and other types of supply. They were also seriously affected by overtime and loss of residents who passed away due to the pandemic. Care homes also had to deal with the fact that families were not allowed to visit which caused unprecedented problems with residents and their loved ones.
Today the situation is still far from normal and they have to deal with loss of revenues as the loss of residents are not easily replaced.
Both hospitals and elderly care homes have a need for extra cash flow. In our experience with hundreds of customers in the sector, we have demonstrated that ERA has the expertise to help the healthcare sector reduce costs and increase quality. Our original scope was in overhead expenses but now, within the healthcare solutions team, we have experts who have previously worked in the healthcare sector - as a result, we are fully equipped to support our clients’ cost optimization projects in their core business.
Foreword:
Chair of Healthcare -Pascal Herroelen
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Our consultants will look into every aspect of your business, both present and future to deliver value through insight.
Decision-makers need to regularly review their current operations, costs and innovation plans to ensure the best viable options are in place for their growth.
Despite discoveries and advancements in medicine widening our understanding of human health, the future of health and care systems will not flourish under innovation alone but will progress through the way organisations predict and respond to the current and future barriers that are, or will, cause clogs in efficiency.
“With quality, outcomes and values being the watchwords for healthcare in the 21st-century,” the main objectives of stakeholders is to discover ‘smart healthcare’ composed of innovative, technology-enabled solutions that are forward-thinking but also cost-effective, and not only accessible within their building walls but through their communications with their clients and patients.
Major challenges remain for global health despite significant developments, from the complications derived from a rising and ageing global population, the spread and treatments of diseases, and the costs of their associated care. Health care systems will have to adapt to tackle these issues, with a shifting focus from treating the sick to investing in preventative measures and preserving healthy populations through the assistance of technology. In order to ensure healthcare organisations are fighting fit for the future, decision-makers need to regularly review their current operations, costs and innovation plans to ensure the best viable options are in place for their growth.
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Industry challenges
Ageing
Populations
Technology
Supplier
Relationships
General Waste and
Clinical Waste
Regulatory and
Economic Changes
Resources
Who are ERAExpense Reduction Analysts [ERA] specialise in helping its clients get more from their suppliers, with an overall aim of improving the services you receive whilst also reducing the price you pay for them. Our team of specialists have deep expertise in a wide range of areas where you spend money with suppliers, including those with extensive experience in the healthcare sector who regularly deliver savings within a range of categories to delighted clients.
We have a proven track record of reducing overhead costs for organisations just like yours.
As with any charity, keeping costs down and securing the most competitive rates from suppliers is a high priority. Sue Ryder, a top-class procurement consultancy needed to offer much more than great savings.
“They get to know how we would like to run things with suppliers and work seamlessly as part of our team. This working relationship has been nothing but win-win for us.” David White, Head of Procurement - Sue Ryder
ERA is currently tracking over £2millon of spend and delivering 23% savings across the board, with more on the horizon.
Clinical Waste Savings: 31%
Savings delivered with great careCA
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Ageing populations
NOW
6060
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60
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World Population
2050 2100 AS DEMAND SURGES
An ageing population is becoming the new norm around the world
Of the 9.7 billion people expected to be living in 2050, 2 billion will be aged over 60
By 2100, the worldwide population is set to reach the region of 11.2 billion
Healthcare leaders are having to make tough choices on the priority of resources and expenditure
7.7 BILLION
2 BILLION
11.2 BILLION? ?
?
As demand surges healthcare leaders are having to make tough choices on the priority of resources and expenditure.
An ageing population is becoming the new norm throughout communities around the world. Increased life expectancies along with low fertility rates establish themselves as long-term trends3, accounting for the shift in population ratios.
Ageing populations contribute to the rise in chronic illnesses, long-term disability, and multiple other age-related conditions5. Health and care systems are under immense pressure to provide better care for an ageing demographic at justifiable pricing structures6. And while rising demands and the increased cost of care may be profitable for some organisations at the moment, the reality is that it is unsustainable, requiring health and care systems to adapt to cater to the changing demands of the public.
As demand surges, healthcare leaders are having to make tough choices on the priority of resources and expenditure, causing a ripple effect on sustaining the quality of care the organisation strives for7.
NOW
6060
60
60
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World Population
2050 2100 AS DEMAND SURGES
An ageing population is becoming the new norm around the world
Of the 9.7 billion people expected to be living in 2050, 2 billion will be aged over 60
By 2100, the worldwide population is set to reach the region of 11.2 billion
Healthcare leaders are having to make tough choices on the priority of resources and expenditure
7.7 BILLION
2 BILLION
11.2 BILLION? ?
?
Some health and care systems are seeing the rise in family and community members becoming the primary caregiver for ageing individuals and responding by teaching people how to utilise the resources available to them. Health and care systems, across the globe, are looking to other countries to emulate their good points and collaborating with others to improve the services in place in their own8.
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While rising demands and the increased cost of care may be profitable for some organisations at the moment, the reality is that it is unsustainable.
Life expectancy on the rise
Health and care providers are required to deliver effective business results under shorter timelines, but this is an impossible task without the right structure and resources in place. No wonder many businesses highlight this point as one of their primary concerns heading into the future.
The SolutionLi
fe E
xpec
tanc
y at
Birt
h (y
ears
)
Year
198160
65
70
75
80
85
90
95
1991 2001 2011 2021 2031 2041 2051 2061
2015 2035Percentage Growth (%)
Direct payment users (funded by local council)
45.5
211.3
93.9
172.1
157.1
Home care users (publicly funded)
Home care users (privately funded)
Care home residents (publicly funded)
Care home residents (privately funded)
63
86
49
49
110
74.4
397.7
139.5
257.1
330.4
You need the right suppliers at the best price in order to provide the results expected of you. ERA’s range of experts utilise their extensive network of suppliers to secure you the most advantageous deal, using their unquestionable negotiation skills and established relationships to your benefit.
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ResourcesResources are limited for health and care systems which contributes to increasing pressure and rates of failure to cater to the demand. Rising need plus staff shortages result in falling time for effective hands-on care.
But this is not the only worry facing the industry; the rising costs of staffing (both permanent and temporary), products and equipment are causing a strain to protect the bottom line. While limited time, resources and training in-house mean that the essential thorough cost reviews needed to alleviate the problems are missing.
In the UK, staffing levels reach an all-time low, while talent pools dry up as the EU-citizens leave in light of Brexit. Social Care budgets are stretched to their max, with the Minister for Health adding Social Care to his portfolio in an attempt to effectively mould the two halves of the healthcare system.
Changes in the equitable funding for GP services, which aims to reduce the geographical variation in core funding per patient, will result in a profound impact on practice income for many– and not for the better.
UK
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The SolutionThe way your organisation responds to recruitment, retention and nurturing of the right talent will determine how your business fares as the industry develops.
In addition the way in which organisations manage their non-staff resources will be increasingly important.
Hospitals and the NHS are used to maximising meagre resources, but this trend could spend to private providers and medical supplies manufacturers as competition becomes more difficult.
Our teams will help you establish a cost-effective healthcare workforce to drive your business forward, because an investment in staff is an investment in your clients’ health and wellbeing. Having the right workforce, at the best price, will drive productivity and organisational growth instead of threatening the delivery of your health care services as demand increases further.
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TechnologyTechnological disruptions are both a blessing and a burden. On-the-one-hand, many health and care systems currently lack access to performance monitoring information and the real-time data to improve their services. The initial set-up costs and time to pull this vital resource into their organisation may not be possible at the time, but those who fail to collaborate with technology firms or even implement this complex work in-house will be left behind.
But this is not the only worry facing the industry; the rising costs of staffing (both permanent and temporary), products and equipment are causing a strain to protect the bottom line. While limited time, resources and training in-house mean that the essential thorough cost reviews needed to alleviate the problems are missing.
The developments in AI will cut the time scientists spend on monotonous data analysis and testing of molecular combinations. Pharmaceutical labs have already implemented AI to help predict relationships between biology and diseases, but AI’s potential can also be seen outside of the labs too, helping to diagnose and create appropriate treatment plans for patients, allowing for healthcare professionals to focus attention on other tasks. Yet, as advanced as technology is becoming, it is still important that expert human opinion is applied to AI findings, and we will soon see ethical standards in the field concerning the limitations of technological assistance.
Healthcare businesses are feeling the pressure to connect digitally with their customers, to coordinate their appointments and procedures, improve their treatment plans and share test results on digital platforms.
Healthcare businesses are feeling the pressure to connect digitally with their customers, to coordinate their appointments and procedures, improve their treatment plans and share test results on digital platforms. As we head toward the future, customer-centred relationships will be a key influencer in shaping the health and care systems of tomorrow. Health and care systems have a real opportunity to learn from other successful customer-focused industries to provide a more effective service that looks to better target, communicate and serve their customers in a bid to retain them.
Technology is driving less expensive and more efficient processes into the industry, and while initial costs may be incurred, over the long-term, organisations are seeing substantial savings. Technological advances are allowing individuals to self-care, relieving the pressure on the healthcare systems, and ensuring the public are more in-tune with their own health requirements. By 2022, it is predicted that individuals will have a better understanding of their genetic profile, their predisposition to diseases and the effectiveness of the right healthcare at the right time.
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Global adoption of new and developmental technologies will drive the industry forward, helping healthcare systems prevent the cause of illnesses and helping to establish a more health-conscious public.
However, this requires healthcare providers to look toward the future now, spending the initial costs to establish the necessary systems into their structure to prevent them from being left behind. The movement of treatment plans and preventative care onto digital platforms for patients means that care providers can deliver better advanced care planning that results in long-term cost savings and reduced pressure on admissions to care providers. A joint approach between health care systems and the technology they use will see huge developments in the efficiency of services.
The Solution
For more than ten years, ERA’s Debjani Duncan – a qualified nurse and former clinical director in NHS procurement – has helped MMCG to deliver exceptional care.
“Knowing ERA is working in the background to look after this highly strategic area of spend provides a significant level of reassurance. Debjani’s review has meant that we now use a product range better suited to both our business and our residents, our staff are better trained, and we have made significant cost savings into the bargain.” Vicky Craddock - Operations Director
Medical Supplies Savings: 25%
Long term added valueCA
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Author
Pascal Herroelen – BelgiumPascal has a broad experience in general management and in logistics. Since joining ERA he has developed a dedicated business offering for the healthcare business based on the specific needs of the hospitals and elderly care homes. Pascal believes that ERA global network is ideally positioned to benchmark suppliers and identify best practices to allow healthcare institutions to reduce costs without compromising on quality or service.
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Luis Dionisio – Portugal
Nilesh Prag – UK
Iveta Zivicova – Slovakia
Frank Van Opstal – Netherlands Pekka Perttunen – Finland
Zdenek Tuma – Czech Republic
[email protected] [email protected]
Bjorn Mikal Henriksen – Norway
Dirk Hoet – Belgium
François Le Metayer – France
Duncan Levey – UK
Co - Authors
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Regulatory & Economic ChangesStudy findings highlight a global concern in changing regulations on the health and care systems12. Rapid changes in both legislation and the economy are driving organisations within the industry to change quickly, but not always in the most efficient ways.
Health and care systems management are torn between being able to deliver the best possible service, managing cost pressures and following best practice regulations.
Political shifts are not only changing the value of currencies but the trading relationships between countries and the costs related to acquiring products from abroad, which is making it increasingly difficult to plan expenditure.
The UK healthcare systems continue to move away from the fee-for-service system into the coordinated care models, which comes with its risks. Stakeholders look to establish operational efficiency through programs and implement technology, public health management and wellness to improve the systems in place. Their focus draws on value rather than volume through reformed policies that look toward establishing a more customer-centric model.13
UK
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A holistic approach to the investments your organisation makes will be imperative to ensuring regulatory compliance. Understanding exactly what recent and upcoming policy changes mean for the organisational aims will help your business construct the most efficient supply chain and operational practices.
Care providers will also need to establish strategies that protect their admin, finance and reputation from exposure as political, legislative and economic issues rapidly develop.
With the help of our experienced procurement consultants who assess every part of your business, you will be able to achieve a model that far exceeds the best practice expectations, sooner rather than later.
The Solution
Life
Exp
ecta
ncy
at B
irth
(ye
ars)
Year
198160
65
70
75
80
85
90
95
1991 2001 2011 2021 2031 2041 2051 2061
2015 2035Percentage Growth (%)
Direct payment users (funded by local council)
45.5
211.3
93.9
172.1
157.1
Home care users (publicly funded)
Home care users (privately funded)
Care home residents (publicly funded)
Care home residents (privately funded)
63
86
49
49
110
74.4
397.7
139.5
257.1
330.4
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Supplier RelationshipsAs health and care systems look to establish strong and future-proof supply chains amidst uncertain times, many supplier relationships are weak for numerous reasons.
Firstly, organisations are subject to unfair rate changes from their suppliers. As suppliers look to close their margins, suppliers may increase their costs in alignment with legislation reviews and revisions. Health and care systems may also suffer from associated risk from suppliers who have not made the necessary preparations for any legislative, economic or trading changes.
Trade relationships across the world are changing or adapting in light of political developments. This can result in the delay in the transportation of goods, which is particularly concerning in regard to time critical products. Whilst those with multiple suppliers and order points, such as within medical and janitorial supplies, are seeing how this system is causing complications in the flow of their supply chain, accounting for increased costs and time to complete projects.
Many organisations are also under the assumption that big, global suppliers will be able to offer the best deals, however, the best options are often dependent on geographic scope, and what products/services are being supplied and from where. If organisations discount the options available to them from local and national options, they may be missing out on significant opportunities to streamline costs and completion time.
For the UK, new trading agreements are more than likely to incur additional costs into the supply chains. Under the max fac model, technology-enabled solutions will accelerate the movement of goods, however, the processing costs are estimated to amount to £20bn a year for UK-based businesses. This doesn’t even take into account the initial set-up costs for the new technology.
A no deal Brexit would result in new trade agreements to be made which would require businesses to reconsider their supply chains again.
The fluctuation of UK rental prices and the negative equity on owned properties are also major concerns for care home groups and charities.
Healthcare businesses are feeling the pressure to connect digitally with their customers, to coordinate their appointments and procedures, improve their treatment plans and share test results on digital platforms.
UK
Multiple suppliers and order points complicate projects unnecessarily, especially considering that many specialist suppliers will supply everything you need.
Having product knowledge is of paramount importance to ensure like-for-like quality is achieved while reducing costs for your business. Our experts, with vast experience of clinical procurement and thorough understanding and implementation of the Royal College of Nursing ‘Principles of Nursing Practice’, ensure all proposals meet the protocols, expectations and deadlines of your industry.
The Solution
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General Waste & Clinical WasteAn inefficient waste management negatively impacts the bottom line, but it is one of the last areas organisations review. Health and care systems are subject to exploitation as suppliers increase the costs of clinical waste disposal to exceptional rates. It is widely (and wrongly) accepted due to the assumption that its specialist nature would incur such heavy costs.
However, it’s not just clinical waste that needs to be habitually reviewed. Substantial cost savings can be derived from assessing how much organisations are paying for their general waste, food waste and recyclable waste management, particularly as systems move toward charging on weight, and legislation regarding responsible waste disposal could unknowingly result in extra costs for companies who do not comply with best practices.
As Europe drives to reduce its landfill use, suppliers can add costs alongside tax reviews, some of which are unjustifiable.
Health and care systems may also come under threat of rising costs with decentralised waste arrangements which could easily be rectified.
UK
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Prevention is the best, most sustainable way to deal with waste and lower your costs. In an ideal world, this would be easy. However, there will always be all types of waste to deal with in the healthcare industry.
The best way to limit your costs in this area is to regularly benchmark your spending against the market to check that you are not paying more than you should through the cumulative effect of increasing costs.
Reviews include checking that the waste sorting procedures you have in place not only meet current best practices and legislative requirements but are fully-optimised, as well as ensuring the agreements are not tying you down to long-term contracts. This means that organisations can overcome common misconceptions in what constitutes a smart waste management solution, for example the fact that many still believe that a sustainable waste management solution is expensive to implement.
Our experienced Waste & Recycling team are specialists who work with clients to achieve substantial savings in this commonly-forgotten area of operations.
The Solution
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SummaryHealth and care system spending will ultimately be driven by satisfying the demands of ageing and growing populations.
As the global industry aims to develop market expansion alongside regulations and best practice, organisations will have to cater to the costs of implementing technological advances and rising labour costs into the expenditure reviews.
We will ultimately see more healthcare providers collaborating to acquire a competitive advantage, but those who will succeed will be those who address the challenges to operational efficiency and healthy supply chains.
ERA expert Keith Copestake began work with decontamination experts Bioquell in 2015 and continues to support them today, delivering efficiency savings and supporting their mission to lead their market.
“The biggest benefit that working with ERA brings is having an experienced, knowledgeable specialist in each specific cost centre. It’s also refreshing to have a company working for your benefit instead of trying to sell you something or only suggest solutions that bring them the best commissions. ERA work to get the best results for us as their client, regardless of what that means for themselves.” Georgina Pope - Finance Director
Impressive saving & long-term benefitsCA
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Why now?UK health providers can expect health and care costs associated with looking after an ageing population to increase if the promotion of healthy living through self-care and operational productivity and developments in healthcare services fail. This requires organisations to streamline their supply chains to be more efficient and to offer more solutions and services to their clients.
Before engaging with us, many of our clients felt that costs were relatively under control and managed to a satisfactory level. However, there are many misconceptions and barriers which prevent organisations from being able to achieve tangible improvements. We can help you to guard against these whilst creating sustainable supplier relationships that last in the long-term.
The world is developing quickly, and industry capabilities are developing with it, too. Those who don’t act now will be left behind.
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Our process is simple. Our sector specialists, all with established careers in their areas of expertise, use the unique knowledge and experience they have gained over their professional lifetime to help you negotiate a better deal in overhead spend where you don’t necessarily have the specific expertise. We’re so confident in our ability to generate improvement in your structure and bottom line that we back ourselves to find the funds for our fees during the engagement. That’s right – there’s no up-front payment, and if we can’t save you anything or we find you’re already doing the best you can then we walk away without charging you a penny for the validation exercise. Should you need us in the future, we would be more than happy to assist again.
In an ideal world, this would happen for every organisation. However, more than 90% of our engagements show that businesses are overspending unnecessarily. We occasionally see that some organisations are being ripped off. Other times, organisations are doing ok, but could – with the right help – be doing much better in the long-term.
We help you tackle overheads in an approach we call ‘smarter-spending’, so that you can effectively manage internal controls and external relationships to better effect. Running your organisation through our three-step process, we help our clients extract maximum value and continue to support them through regular reviews.
You don’t need a budget to begin. Just agree to meet us, and in an hour we’ll show you why thousands of our clients have seen that with a little bit of help, their money can go a long way.
Three-step Process Model
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Despite advancements in medicine widening our understanding of human health, the future of health and care systems will not flourish under innovation alone, but through predicting and responding to current and future barriers.
Our consultants will look into every aspect of your business, both present and future to deliver value through insight.
expensereduction.com
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