siliconindia | | September 20189Nitin S. Nagon a chain of clinics that this chain was running. His view was that, it was a strategic diversion. I call this decision based on a strategic compass. Every organization needs to have its own strategic compass. Having one will ensure elimination of distractions to its strategy. Look around; you will always find some strategic cost in existence.Procurement CostsEvery organisation worth its salt is armed with certain purchasing power that can help in optimising procure-ment costs. As organisations become larger, their pur-chasing power increases due to economies of scale. One key factor that enables huge rebates in procurement is standardisation. In addition, organisations can mirror brand standardisation of drugs and consumables by way of standardisation in protocols and processes. Running a tight and transparent procurement system is extremely crit-ical, and benefits of optimisation are endless. I have known of organizations that have woven this into annual budgeting exercise with clear targets set.Insourcing vs. OutsourcingMany of us have been privy to countless debates on this topic. It is always prudent to handle elements critical to service delivery internally. It ensures quality of output, control over processes and a quicker response to changes. Anything that is not linked to service being offered, or qualifies as non-core, can potentially be outsourced. Outsourcing is beneficial because it serves as hived-off output centre with zero operational headaches. Still, outsourcing critical and core tasks can prove to be an operational nightmare and is avoidable. In the long run, such operational issues can erode all previously envisaged cost benefits. A pragmatic balance of insourcing and outsourcing can lead to an optimal cost structure. A trend seen in recent times is most organizations have vendors who manage their 24x7 calls.Indirect CostsIt is imperative for hospitals to navigate their indirect costs into a healthy range, which if left uncontrolled, can lead
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