Strategic Value Analysis In Healthcare

Weekly Strategic Value Analysis Newsletter

Fast Target Savings

Strategis^TM Value Management

ValueNet Central ^TM Value Analysis Software

About HCP

Client List

Articles and White Papers

Contact HCP

SPANNING THREE DECADES OF VALUE MANAGEMENT LEADERSHIP

November 7, 2001

HOW TO GAIN MANAGEMENT SUPPORT FOR YOUR COST MANAGEMENT INITIATIVES

The cornerstone for any organization to saving money can be summed up in two words MANAGEMENT COMMITMENT.  My experience in cost management shows that if management is committed to saving money –IT WILL!  Now, the question is- why doesn’t executive management take this first step?  Isn’t saving money an integral part of their job?  Don’t they understand no organization in the 21^st century can survive with disproportionately higher cost then their competitors?  Well, these questions all deal with logic, which I have found doesn’t always enter into the equation.  Let’s now look at the reality of the six reasons why organizations aren’t committed to saving money:

1.                  Management by DRIFT

Too many organizations are caught up in the activity trap.  That is, a lot of activity but little or no results.  Their short range planning is five minutes and their long term planning is 15 minutes.  They jump on the bandwagon of the next big management fad -- Six Sigma, 100-day Plan, 360 Degree Evaluations, The Agenda – without having a masterplan that is proven to save money and that makes sense. 

2.                  Fiddling While Rome Burns 

On the other hand, there are organizations that are near bankruptcy and don’t know they are bankrupt.  They are losing money, can’t pay their bills, don’t have money to replace their equipment or to give their employees raises, but they are doing little or nothing to stem the tide of red ink.  They are frozen in place, wearing rose-colored glasses and fiddling while Rome burns.

3.                  Why Rock The Boat

There is a philosophy among some executives that if you keep your head down, maybe they can keep out of harms way.  They don’t make any savings recommendations because they might take some heat or risk taking some criticism if the idea doesn’t work out, so they just keep their head down and don’t rock the boat.

4.                  Overconfident

It’s not uncommon to hear an executive say, “ I’ve got the best people, the lowest costs and excellent cash flow.  Why do I need to save money?”  In reality he or she won’t have the best people, the lowest costs and excellent cash flow for long with an overconfident attitude.  All organizations have business cycles (good and bad). Chrysler, ATT&T, Microsoft, Hewlett-Packard and most of the dot-coms are good examples of this overconfident attitude.  Overconfident executives should learn from these lessons too.

5.                  Not Invented Here Syndrome

This should be added to the list of the seven deadly sins as the most deadly sin a business can make regarding saving money or, for that matter, improving its organization as a whole.  The term “not invented here” simply means that an organization accepts little or no ideas from outsiders (consultants, vendors or competitors)?  They know best what works at their organization (we are unique). “ Only insiders have the best ideas to save money” is their mantra, and they let you know it, if you are within earshot.   

6.                  Focused On Other Priorities

I’ve heard just about every excuse as to why organizations don’t have the time to save money -- new building program got us really busy, we are joining a network, the board wouldn’t like it, labor union campaign in progress, new computer installation taking all of my time, we are into an inspection -- which I sum up as PLATE TOO FULL to save money?  While many of these pro-grams, projects and tasks are important, if an organization doesn’t continuo-usly control and conserve its money, manpower and materials, it won’t have the money to do all the other things it wants, needs or would like to do.

Now that I have raised you consciousness on what’s holding back your executive management from committing to savings at your organization, now what can you do about it?  The first step is to internalize the six reasons why your executive management or your direct report might not want to commit to saving money, then develop counter arguments that compliment this reasoning.   For example, if your management is adrift (lost in a activity trap) try to show them how your recommended cost saving idea will be a good fit with their current initiatives too. Or, if they tell you that their plate is too full for a new project, try to convince them that there is room for just one more project, especially since the savings from your project will pay for the building program, union campaign or computer installation that he or she is worrying about paying for.  The solution to this challenge – management commitment – isn’t to fight your management reason(s) for non-commitment, but to use the six reasons that are holding back savings to formulate and integrate your cost saving ideas into their thinking like a good fitting glove.  By following this formula you will gain the management support you need to launch not just one, but many cost management initiatives with strong management commitment and support. As opposed to fighting an uphill battle to get your cost savings ideas heard through all the noise in your organization or by proving that your management has a habit of wrong thinking, which will get you no where fast.

 Copyright © 2002 The HCP Group, Ltd.

Robert T. Yokl, President, The HCP Group, Ltd., has over 35 years of experience as a consultant and manager in the field of Supply/Value Chain Management and is one of the country's leading healthcare experts in value analysis, value engineering and materials management. He is the developer and program leader of the award winning Certified Value Analysis Practitioner Training Program™. Mr. Yokl is also the developer of the healthcare industry's leading ValueNetCentral™ Value Analysis Software. Over the past two decades he has trained thousands of healthcare managers in his patented Strategic Value Analysis™ and Team-Based Project Management™ processes and has assisted scores of organizations in developing their own value management programs. He has published six books, videos and audios on supply/value chain management. His latest book being, “ Strategic Value Analysis™: The #1 Smart Strategy for Taking Cost Out of a Healthcare Organizations’ Supply/Value Chain”.