Establishing economic savings targets right out of the gate.

Abstract

Although very important, establishing savings targets at the outset of a restructuring program is by no means an exact science. This article outlines three options for setting targets that vary according to the basis for the target and the level of effort required to arrive at the target. Under Option 1, financial realities dictate the target. Restructuring is simply pursued as a means to achieve the required cost reductions. Under Option 2, a hospital does not pre-suppose a target, but adopts directly the achievements of other institutions as their own economic goals. Lastly, under Option 3 hospitals compare themselves to other successful restructured hospitals across specific organizational and operational characteristics. With these comparisons as guides, the hospital establishes a comfort level within each area and sets targets accordingly. Regardless of the method you choose, our experience & research has taught us one universal truth about savings through restructuring. The hospitals that save money are the hospitals that try.