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How Can Nurses Reduce Healthcare Costs?

How Can Nurses Reduce Healthcare Costs
What Are Some Ways Nurses Can Influence Healthcare Organization Costs? Nurses are not just limited to the tasks of bedside care. Many nurses are creative and come up with innovative ideas to improve the areas in which they work. In fact, some nursing programs incorporate leadership and management courses which introduce the idea of budgeting and cost in healthcare.

Nurses influence cost in healthcare organizations mainly because they are on the front lines. Change from high in the leadership chain does not work without information and feedback from front-line staff. Many department managers implement improvement projects while involving those on the front lines, from receptionists to nurse’s aides to registered nurses.

For example, nurses can round to identify which supplies are unnecessary and maybe go unused for long periods of time, and possibly even eliminate certain supplies from stock. RELATED : Another way nurses can help influence organization costs is by advocating against unnecessary treatments or medications.

  • For example, nurses can be diligent at documenting and reporting symptoms and patient progress which would help clinical decision-making by physicians.
  • If, for example, a post-op patient is receiving pain medications around the clock, nurses can assess the pain and offer to hold a dose to see how the patient tolerates it.

If pain is controlled without around-the-clock medicating, the physician can switch to PRN, thereby reducing cost. Clinic nurses are in a prime position to help with cost efficiency. They sometimes function as both nurses as well as office managers, ordering supplies and monitoring stock.

What are two types of behavior from a staff nurse can be considered disruptive?

Mitigate disruptive behaviors – Disruptive behaviors among nurses can include refusing to work with a particular nurse, ignoring a call to help with a patient that requires multiple nurses, and ostracizing a nurse without explanation, as examples. Kathleen Bartholomew, RN, MN, author of Ending Nurse-to-Nurse Hostility, says that nurse managers need to get on the unit and observe behaviors, especially at shift change.

Observe the staff in action. How is the staff interacting with each other? Are there cliques? Conduct staff surveys. Send out annual staff surveys to gauge engagement. Bartholomew recommends surveying the newest nurses about their experiences, “Did we make you feel welcome at all times?” Set clear expectations with the nursing team about which behaviors are acceptable and which are not. Don’t listen to gossip. Both Bartholomew and Shrapnel stress the importance of nurses finding out the facts of any complaint before reacting. Educate staff about appropriate behaviors in meetings, To help combat disruptive behaviors in her unit, Shrapnel holds 30-minute educational sessions during her monthly meetings.

The consequences of disruptive behavior can lead to a decrease in morale and affect retention, and cause burnout, and it can also indirectly affect patient safety, says Shrapnel. “If you have a nurse causing disruption, the behavior could have a detrimental effect on the patient.” According to a 2008 survey of healthcare professionals, 71% of respondents felt disruptive behaviors were linked to medical errors, 27% felt disruptive behaviors were linked to patient mortality, and 18% were aware of a specific adverse event as a result of disruptive behaviors.

What are cost reduction strategies?

Frequently Asked Questions – What are cost reduction strategies? Cost reduction strategies are practices and principles designed to optimize operational efficiency. They cover all aspects of running a business, from hiring employees to booking flights.

Successful implementation works by streamlining processes, allocating resources effectively, and eliminating waste. What is cost reduction with an example? Anyone in the human resources department knows that employee onboarding takes time, money, and resources. A company can reduce administrative costs by only hiring people when it has an urgent need.

If the potential role doesn’t align with routine business activities, it makes sense to outsource the position. This strategic approach minimizes the need for employee onboarding while moderating payroll expenses. What are the 6 types of cost savings? A profitable venture saves money in six different ways: budget savings, historic savings, index savings, ratio savings, RFP savings, and technical savings.

Budget savings involve the difference between a budget and the actual business expenses. Historic savings cover the difference between the current unit price and the baseline or indicator price from a previous period. Index savings include outside savings that result from the external markets and typically impact the supply chain, products, or services. Ratio savings combine two ways to save money. For example, a company might combine technical and historic savings. RFP savings are a form of quote shopping. Companies obtain multiple responses from vendors to a request for proposals (RFPs) for a project. The goal is to choose a proposal with high-cost savings. Technical savings stem from changes in technical specifications. For instance, a company may purchase expensive servers only to switch to cloud computing to reduce operations costs.

How would you apply cost reduction strategies? Letting go of employees isn’t the only way to reduce expenses. Organizations can establish cost-cutting initiatives by pinpointing wasteful business practices and correcting the inefficiencies. That may include upgrading digital resources, encouraging employees to work remotely, automating select processes, and getting rid of overhead.

How do nurses make a difference?

How Nurses Make a Difference in the Community – Improving Care Nurses play critical roles in hospitals’ efforts to improve the quality of patient care. Nurses are at the front lines, improving the medical outcomes for patients by decreasing the likelihood that they will acquire pneumonia as a result of their hospital stay, decreasing the time that patients stay in hospitals, and reducing the likelihood of deep vein thrombosis and pressure ulcers.

Nurses even help to decrease mortality rates. Outside of just making sure that a patient’s needs are met, there is another way in which nurses can benefit their patients as well: education. Becoming a nurse, whether someone is pursuing a career as an LPN, LVN, or RN, requires a strong educational foundation.

While registered nurses must have either an associate or bachelor’s degree to enter the workforce, practical and vocational nurses only need to complete a diploma program. However, their education doesn’t stop there. Most states require some type of continuing education every two or three years in order to maintain their nursing license.

  • In the rare case that a state doesn’t require continuing education for licensure, it’s still often required by the hospital that the nurses work for.
  • The benefit of this continuing education has a trickle-down effect that benefits the patients and other hospital staff.
  • The new techniques and advancements in medication and technology that nurses learn about through continuing education enhance the service that the hospital provides and the quality of care that patients receive.

Teaching the Community Public health nurses improve and impact the health of the entire community in which they work and live. These nurses speak to large groups of people about various health issues and improve the health and safety of those people by giving them greater access to quality care.

They may go into schools and talk to groups of students about issues that are specifically affecting their health. They may also speak to community organizations or work at local events, answering questions and letting people know about different health opportunities that are available to them. These nurses also monitor the trends for their communities and identify the greatest risks for the local populations.

By better understanding the risks, they can implement educational campaigns and set up events that give their local communities access to both screenings and immunizations. Improving Health Literacy for Individuals Health literacy (2) is the degree to which people have the ability to obtain, process, and ultimately understand basic information about their health in order to make appropriate health decisions.

  1. It could include being able to read and understand prescription bottles, appointment slips, and other health-related materials.
  2. Having adequate health literacy increases an individual’s ability to take responsibility for their own health as well as the health of their family.
  3. In the U.S., 88% of adults (3) have health literacy limitations.
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While that number may be stocking to read, it doesn’t stop there. Over one-third of adults in the United States, 77 million people, struggle with self-and family-care management tasks. It comes as no surprise then that people who have low health literacy are far more likely to experience a poor health status.

  1. Nurses make health literacy a primary focus of their file, which helps to enhance patient care, improve patient safety, and increase the likelihood of a positive outcome for the patient.
  2. Nurses are able to integrate patient health literacy efforts into their interactions with patients, creating a judgment-free environment where they can review medical terminology with the patient, using non-clinical terms to ensure that the patient fully understands what’s happening to them.

Nurses can also have candid conversations with patients about aftercare when they leave the hospital, explaining the steps that the patient needs to take for their own care and why it’s so important. In addition, nurses can use these one-on-one interactions to discuss other areas of a patient’s health, bringing up topics like diet and exercise and proper hygiene, if warranted.

By engaging in health literacy conversations with patients, nurses are able to empower those individuals to make more educated decisions and will ultimately increase the likelihood of a positive outcome when the patient is out of the hospital. Advocating for Others Nurses have extensive experience in taking care of patients and carrying out protocols and procedures in a hospital setting.

This makes it easy for them to recognize in what ways the hospital policies are improving the health of patients. Nurses play a pivotal role in shaping hospital-wide policies, identifying approaches that will more effectively help patients and families.

  • Nurses do not stop advocating for patients at the hospital level, either.
  • Nurses, particularly public health nurses, coordinate with state and federal authorities to help patients and improve the quality of health care that’s available in local communities and around the world.
  • They are also responsible for making it easier for people who are underserved by their communities to get access to the quality health care services that they need.

Serving as Patient Advocates In addition to sharing their extensive knowledge to educate both patients and the general public, registered nurses and LPNs also serve as patient advocates, ensuring their patients’ concerns are addressed by physicians and other medical professionals.

Nurses can also explain to a patient what is happening to them, taking the confusion and fear out of unknown procedures. Nurses are also able to point out to physicians different problems to physicians when they are performing their rounds. These issues could potentially have been overlooked by the physician because of the limited amount of time they have to spend with the patient.

In this way, nurses can reduce the likelihood of mistakes or misdiagnoses, as physicians have a medical professional with the patient at all times gathering information. They also serve as patient advocates by working to preserve the dignity of their patients.

A nurse can empathize with patients, helping them to feel like they are a person as opposed to just a diagnosis. Nurses can help patients feel safer and more like a human. Nurses ensure that they are not only treated respectfully but also that their ethnic and cultural beliefs are respected. They are committed to providing the same level of compassion and professionalism for every patient.

Nurses also do their best to manage or prevent their patients from suffering, whether the pain that they’re feeling is mental, physical, or emotional. Offering Emotional Support Nurses understand that being admitted to the hospital is stressful for patients and almost every patient has some level of fear.

Their fear could be that they don’t have answers to all of their questions or because they don’t quite know what to expect in the coming hours or days. When a patient is feeling fearful, they often need help to manage their anxiety and stress. Nurses can offer compassion and humor to ease the fears of their patients.

They also provide a certain amount of security and comfort, which can help patients feel like they have greater control over their current circumstances. The support nurses provide can be invaluable for the well-being and health of their patients. Small gestures can make a big impact in the lives of their patients.

Even something as small as answering a request for assistance with a genuine smile can ease a patient’s fears and improve their day. Improving the Lives of Families Nurses impact more than just the lives of their patients. They also improve the lives of the patients’ families. Nurses make sure that the families of the patients are both seen and heard.

They offer genuine, welcoming smiles, provide chairs so the family can sit with their loved ones, offer to get coffee or water, or encourage family members to hold the hands of the patient while they’re sleeping. Nurses understand that these are small gestures.

  • However, they also recognize that families are suffering right along with the patient and that the same compassion and empathy is needed.
  • While caring for multiple patients and seeing to the needs of multiple families keeps nurses busy, these small, simple gestures create a ripple effect that can profoundly impact the lives of everyone around them.

Improving the Lives of Co-Workers Not only do nurses work to create an impact in the lives of their patients, but they also do the same for their colleagues. Nurses help out when they see that a colleague is overwhelmed, helping with the patient admission process, getting a patient settled into a hospital bed, or even just getting them something to eat or drink to make them more comfortable.

  1. These small gestures may only take minutes, but they can make a big difference in another medical professional’s day.
  2. Volunteering in Their Communities Nurses commit much of their time to help patients in a hospital or other type of health care setting.
  3. However, they often serve their communities in other ways as well outside of the hospital.

A study in the journal Policy, Politics, & Nursing Practice (4) suggests that 80% of the 315 nurses that were surveyed help improve the health of their community outside of a health care environment. Some volunteer the medical knowledge, others educate the public on the importance of vaccinations and hand-washing, and others give guidance on exercise and nutrition.

Others may even volunteer for organizations like Habitat for Humanity, which may not require nursing-specific skills, but do call for the same qualities that nurses bring to work with them every day, such as empathy, teamwork, the ability to effectively multi-task, and an understanding of how our living conditions impact our mental and physical well-being.

Supporting the Medical System According to the American Association of Colleges of Nursing (5), there are over 3.8 million registered nurses nationwide, with over 200,000 new registered nurse positions protected to be created between 2016 and 2026. In 2015, there were nearly 1.1 million doctors (6) of medicine in the U.S., a figure that included an estimated 160,000 inactive physicians and approximately 55,000 who were unclassified.

Using those numbers, that would put the ratio of nurses to doctors at 38 nurses for every 11 doctors. Without nurses, there is no way that physicians, even with other medical personnel, could provide the level of quality care that patients expect when they go into the hospital or another type of health care environment.

While nurses often go above and beyond in the interest of caring for their patients, nurses are critical for ensuring that patients’ basic needs are met while they are in the hospital. The role of nurses has evolved over the years. Nurses today make a difference for communities and patients all around the world, caring for those who are hurt or sick, offering kindness and compassion, and improving their health literacy to empower them to take better care of themselves.

  1. They also work outside of the health care environment, serving their communities in other capacities and advocating for patients by recommending new local, state, and federal policies.
  2. As the role of nurses continues to evolve, one thing remains very clear: The demand for nurses is going to continue to remain high.
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If you are interested in training for a career in nursing, Concorde can help. Depending on your program, you can gain the credentials and skills you need to begin a rewarding health care career in as few as 12 months. Learn more about the Concorde nursing programs today.

“PATIENT PERSPECTIVE: Nurses Make the Difference,” May/June 2009, Volume:32 Number 3, page 216-217. https://www.nursingcenter.com/journalarticle?Article_ID=865572&Journal_ID=54035&Issue_ID=865548″Health Literacy,” HealthyPeople.gov, https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health/interventions-resources/health-literacy”Call for action: Nurses must play a critical role to enhance health literacy,” Nursing Outlook, https://www.nursingoutlook.org/article/S0029-6554(17)30628-0/fulltext”Nurses Improve Their Communities’ Health Where They Live, Learn, Work, and Play,” First Published March 17, 2017. https://journals.sagepub.com/doi/10.1177/1527154417698142″Nursing Fact Sheet,” American Association of Colleges of Nursing. https://www.aacnnursing.org/News-Information/Fact-Sheets/Nursing-Fact-Sheet”U.S. Physicians – Statistics & Facts.” Statistica Research Department, November 28, 2019. https://www.statista.com/topics/1244/physicians/”Image,” gm.esthermax. https://www.flickr.com/photos/esthermax/27649754016/sizes/m/

What are your weakness as a nurse?

How to Discuss Your Weaknesses in a Nursing Interview – Most people you meet won’t ask you to point out your shortcomings in everyday conversation, but on job interviews, it’s a standard topic. Fortunately, your interviewer won’t expect you to be too hard on yourself.

  • Everyone has something they’re great at and something they’re trying to improve upon, and these areas of improvement are the types of “weaknesses” you can mention in your interview.
  • Monster.com suggests you state the professional weakness but emphasize the positive and add your solution for overcoming this shortcoming — because all weaknesses are opportunities for growth.

Any time you mention a weakness, it’s wise to mention what you’re actively doing to overcome the hurdle. This shows that you’re eager to grow professionally and you’re solutions-oriented, which should make you an attractive candidate. This also will show your interviewer that you have the mindset to be willing to learn and change.

  • Paying too much attention to detail
  • Wanting to do everything at once
  • Spending too long on paperwork
  • Having a lack of clinical experience (for new grads)

What are the five major management functions for nurses?

Slide 15. Alignment with Organizational Goals 5 – Say: Nurse managers are responsible for aligning the unit’s goals with the hospital’s goals. Nurse managers serve as the decisionmakers who are responsible for the best interests of the unit. They make sure unit staff members are able to clearly see how unit goals align with the hospital’s goals.

Nurse managers encourage their staff to participate in projects and initiatives. Using the 4E’s, nurse managers engage unit staff to participate in the project, educate them on the importance of their involvement, execute a plan of action with their staff, and evaluate their progress with the intervention being carried out on the unit.

When working with staff, nurse managers use more than one form of communication to share and receive information. By supporting effective communication on the unit, nurse managers are able to ensure their staff members have the necessary information to complete quality improvement work.

What are unethical behaviors in nursing?

Avoiding Liability Bulletin – December 2013 As you know, state boards of nursing are empowered with the duty to administer and enforce the state nurse practice act and its rules. This duty is based on the board’s overall duty to protect the public from unsafe and/or incompetent practitioners.

  1. At first blush, you may think you know what a state board of nursing means by this phrase.
  2. Most of your guesses may be right.
  3. Examples include breaching nurse-patient confidentiality, theft of patient money, belongings or identity, and crossing nurse-patient professional boundaries.
  4. Some of these types of behaviors were discussed in an earlier bulletin that focused generally on what types of conduct a board of nursing could consider violations of the state act and/or rules.

The unethical, unprofessional or illegal conduct by a nurse licensee as basis for disciplining a nurse is expanding. No longer are the more “common” reasons you might think would violate this sanction are the only ones that are analyzed by a board when evaluating a nurse licensee’s conduct.

  1. For example, one of the more recent examples that you should be aware of is when a nurse is convicted of driving under the influence (DUI).
  2. You might think this is a stretch, since a DUI has nothing whatsoever to do with your practice as a nurse or an APN.
  3. The DUI did not take place while the nurse was on duty.

However, in a recent California case (1), the California Board of Nursing and the California Appellate Court saw this conduct differently. In upholding a nurse’s discipline by the board of nursing for a conviction for “using alcohol in a dangerous way” and an “alcohol-related conviction”(language from the state nurse practice act and rules), the court held that there does not need to be a nexus between a licensee’s fitness to practice nursing and conduct for which the licensee was convicted.

  1. The court continued that the duty of the board is to protect the public, and when a state legislature passes statutes and rules that indicate certain conduct is related to their professional qualifications, the board can take disciplinary action against the licensee.
  2. Although the California Nurse Practice Act and rules had listed specific language for conviction of crimes, for alcohol -related convictions, and for using alcohol in a dangerous way, this decision opens the door for acts and rules to be amended to include such specific language.

It also potentially allows other boards of nursing to bring disciplinary actions against nurses for “unprofessional conduct” that may not be specifically listed but result in a conviction of a DUI, shoplifting, driving on a suspended license, as examples, or other situations that raise a question as to the professionalism and ethics of the nurse licensee.

  • Know your nurse practice act and rules and what both say about your conduct as a licensee and the obligations you must adhere to as a result of the license you possess;
  • Pay attention to the specific language in both the act and rules that allows the board to take disciplinary action against you in a non- nursing practice issue;
  • Remember to conduct yourself as a professional at all times, both while on duty and when not on duty;
  • Carefully consider getting involved in any situation that may result in notoriety, an arrest, adverse publicity, or a conviction;
  • Carefully consider what you post on any social media page or in an e-mail that might be considered “unprofessional” or “unethical”;
  • Select your friends wisely and with care;
  • Don’t drink and drive;
  • Pay your state and federal income taxes and any student loans;
  • Pay any child support for which you are responsible; and
  • Monitor legislative changes to your state nurse practice act and/or rules.

FOOTNOTES

Sulla v. Board of Registered Nursing, 205 Cal. App.1195 (4 th District).

THIS BULLETIN IS FOR EDUCATIONAL PURPOSES ONLY AND IS NOT TO BE TAKEN AS SPECIFIC LEGAL OR OTHER ADVICE BY THE READER. IF LEGAL OR OTHER ADVICE IS NEEDED, THE READER IS ENCOURAGED TO SEEK ADVICE FROM A COMPETENT PROFESSIONAL.

What are three strategies for cost minimization?

Cost Minimisation Cost minimisation is a financial strategy that aims to achieve the most cost-effective way of delivering goods and services to the require level of quality. It is important to remember that cost minimisation is not about reducing quality or short-changing customers – it always remains important to meet customer needs.

  1. The low-cost or “no-frills” airlines are some of the best examples of businesses where cost minimisation has been taken to an almost obsessive level.
  2. Airlines like Ryanair and Easyjet have either removed or charged customers for many non-essential parts of the airline service.
  3. Similarly, the discount retailers such as Poundland, Lidl and Aldi base their business around a relentless focus on minimising costs and operating efficiently.

In theory a reduction in costs results in higher profits and better cash flow. But not always! The trick is to identify cost-reduction actions which do not adversely affect revenues, quality or customer service. Businesses tend to go through phases of cost minimisation.

During an economic boom or when a business is enjoying rapid growth in revenues, cost structures do not necessarily get the attention they deserve. A business that is adding new locations, launching new products or entering new markets will often see revenue expenditure as a kind of “investment”. Before too long, and often not spotted by management, the business has substantially grown its cost base and added much complexity to the organisation.

4 Step Plan to Lower Hospital Healthcare Costs

It sometimes takes a severe economic downturn to prompt a business to take a hard look at its costs to see where savings could be made. The recession of 2008/09 saw nearly every well-managed business look for ways to reduce overheads, improve efficiency and reduce production capacity.

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Eliminating waste & avoiding duplication (note the link to lean production) Simplifying processes and procedures (the acronym KISS – “keep it simple, stupid” is always worth applying in business) Outsourcing non-core activities (e.g. transaction processing, payroll administration, call handling) Negotiating better pricing with suppliers Improving communication (often by cutting out unnecessary communication) Pruning product ranges and customer accounts to eliminate unprofitable business Using the most effective methods of training and recruitment Introducing flexible working practices that benefit both the employee and employer Aggressive control over non-essential overheads (e.g. banning first or business class travel unless essential)

Actions aimed at minimising costs need to be taken with care. The danger is that over-aggressive pruning of overheads, using cheaper raw materials or cutting pay rates might have a detrimental effect on quality and customer service. Being too aggressive with cost minimisation has several other potential disadvantages. For example:

The business can be left with insufficient capacity to handle unexpected or short-term increases in demand Cost reductions by one department may surprise and/or annoy other functions if they are not properly communicated and coordinated

: Cost Minimisation

What makes a nurse a good nurse?

Content courtesy of Capella, It can be challenging to narrow down the list of qualities that good nurses exhibit. Yet some characteristics rise to the top consistently for those who excel at nursing. Defined as characteristics, traits, abilities, talents, strengths, values, beliefs, or morals — qualities in a good nurse span the personal and professional realms. These six qualities stand out.

  1. You’re a person who deserves a high level of respect. Kindness, fairness, caring, trustworthiness, emotional stability, empathy, and compassion are aspects of your personality that serve you well as a nurse.
  2. You exhibit strong communication skills. You communicate well with patients and colleagues — sometimes at their worst life moments.
  3. You effectively use critical-thinking skills to identify and solve problems. With this strength, you improve organizational protocols and patient care, and you also demonstrate nurse leadership skills,
  4. Your attention to detail helps you successfully carry out instructions from colleagues and nurse leaders. By having this precision and following up on the instructions, you individualize care to meet each patient’s needs.
  5. Your time management and delegation skills are top notch. This is especially helpful with patient care responsibilities.
  6. You’re a team player, working fluidly with patients, families, and interdisciplinary healthcare staff. Your collaborative approach allows you to adapt to changing situations on the fly.

With years of education, training, and practice, you develop and strengthen these capabilities and skills. These qualities of a good nurse enhance your effectiveness and elevate the entire profession.

What makes a nurse powerful?

Having empathy to interact with the patient and their family and helping them to cope with problems is very important in a nursing position. Having the ability to understand and share those feelings with the patient and their loved ones is an essential strength for a nurse.

What are the cost strategies?

Cost strategy – Cost strategy is built on no-frills. Cost leadership strives towards cutting costs to a minimum possible levels in order to provide customers with lower prices and thus boost their savings. Cost strategy prerequisites normally relate to high technical capabilities and access to capital for the company to invest in technology and assure economies of scale.

High productivity High capacity utilization Use of bargaining power to negotiate the lowest prices for production inputs Lean production methods (e.g. JIT) Effective production process Effective distribution channels

Leading cost leadership brands have obtained a major success by introducing revolutionary business models built on a single base – the lowest possible prices for a given perceived value.

What is cost containment in budgeting?

Cost containment definition / Cost containment involves tight control over to ensure that the total amount of does not exceed the budgeted amount. An effective cost containment program requires the active oversight of management, as well as a budgeting process that yields reasonable expenditure targets.

  • A downside of cost containment is that management focuses too much on the cost side of the business, rather than pursuing new opportunities.
  • When engaged in cost containment activities, it is essential not to pare away too deeply at the structure of a business, since this will impair its long-term ability to compete.

/ / : Cost containment definition

What are three strategies for cost minimization?

Cost Minimisation Cost minimisation is a financial strategy that aims to achieve the most cost-effective way of delivering goods and services to the require level of quality. It is important to remember that cost minimisation is not about reducing quality or short-changing customers – it always remains important to meet customer needs.

  • The low-cost or “no-frills” airlines are some of the best examples of businesses where cost minimisation has been taken to an almost obsessive level.
  • Airlines like Ryanair and Easyjet have either removed or charged customers for many non-essential parts of the airline service.
  • Similarly, the discount retailers such as Poundland, Lidl and Aldi base their business around a relentless focus on minimising costs and operating efficiently.

In theory a reduction in costs results in higher profits and better cash flow. But not always! The trick is to identify cost-reduction actions which do not adversely affect revenues, quality or customer service. Businesses tend to go through phases of cost minimisation.

During an economic boom or when a business is enjoying rapid growth in revenues, cost structures do not necessarily get the attention they deserve. A business that is adding new locations, launching new products or entering new markets will often see revenue expenditure as a kind of “investment”. Before too long, and often not spotted by management, the business has substantially grown its cost base and added much complexity to the organisation.

It sometimes takes a severe economic downturn to prompt a business to take a hard look at its costs to see where savings could be made. The recession of 2008/09 saw nearly every well-managed business look for ways to reduce overheads, improve efficiency and reduce production capacity.

Eliminating waste & avoiding duplication (note the link to lean production) Simplifying processes and procedures (the acronym KISS – “keep it simple, stupid” is always worth applying in business) Outsourcing non-core activities (e.g. transaction processing, payroll administration, call handling) Negotiating better pricing with suppliers Improving communication (often by cutting out unnecessary communication) Pruning product ranges and customer accounts to eliminate unprofitable business Using the most effective methods of training and recruitment Introducing flexible working practices that benefit both the employee and employer Aggressive control over non-essential overheads (e.g. banning first or business class travel unless essential)

Actions aimed at minimising costs need to be taken with care. The danger is that over-aggressive pruning of overheads, using cheaper raw materials or cutting pay rates might have a detrimental effect on quality and customer service. Being too aggressive with cost minimisation has several other potential disadvantages. For example:

The business can be left with insufficient capacity to handle unexpected or short-term increases in demand Cost reductions by one department may surprise and/or annoy other functions if they are not properly communicated and coordinated

: Cost Minimisation

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