New Mexico system saves $10M
using Premier’s labor solution   

Challenge:

Hospitals in New Mexico operate in a challenging environment with extremely low reimbursement levels. To operate successfully, Presbyterian Healthcare Services must manage expenses very efficiently – at or near the top quartile. As the organization looks to the future, it envisions harsher reimbursement constraints and much more pressure on cost efficiencies. As labor represents 50 to 55 percent of its costs, Presbyterian had an imperative to use human resources more effectively.

Solution:

• Presbyterian recently installed Premier’s OperationsAdvisor® comparative database and productivity product, its first labor management system.
• OperationsAdvisor’s benchmarking component is used during budgeting to set departmental performance levels.
• Volume-adjusted targets are built into productivity reporting which 450 managers receive biweekly so they know every two weeks who is on target.
• Managers monthly must explain unfavorable variances with action plans; departments with unfavorable variances cannot post new positions.
• During the first nine to 12 months, much time was spent educating managers and getting managers on board and comfortable with the data.

Result:

• Successful implementation of new labor management program.
• Department heads are comfortable with OperationsAdvisor. They are using it day in and day out. They are hitting their targets. Very few cost centers are unfavorable to their targets.
• Validated saving of $10 million in calendar year 2009.
• Expect to save another 3 percent of the operating budget in calendar year 2010 or another $7 million.

"Formerly, it was hit or miss. We didn’t have the right information at the right time to the right people. That’s what OperationsAdvisor has done for us. We get the information to frontline managers in a very timely fashion, and they’re the ones who can impact staffing. It’s been tremendously successful. I would not want to live without it. I would not want to be in this environment without it. As we look to the future, it’s going to be reduced reimbursement and a lot of pressure on cost efficiencies. This tool tells me immediately where we are. Using the benchmarks, we can identify opportunities for improvements, plug them into the tool and help managers meet those targets. Without it, you’re flying blind."

Dale Maxwell, CFO
Presbyterian Healthcare Services
Albuquerque, New Mexico

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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