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A Cost Reduction Plan That Saved an Assisted Living Facility 15







Cost reduction plans examine an organization's operations and find ways to reduce the cost of doing day-to-day business. Instead of making one-time cuts in budgets or salaries, cost reduction plans create continuous improvements and efficiencies that ultimately contribute positively to a company's bottom line, for many years to come.

An assisted living facility recently hired a third-party cost containment firm to closely examine their operations. Everything from cleaning supplies to vendor relationships was analyzed by the cost containment firm, and the results were astounding. After the firm completed its analysis, the assisted living facility achieved a cost reduction of 15% annually.

The organization is a non-profit system with 25 communities including assisted living, senior apartments, and skilled nursing facilities. Cost reduction for such a widespread organization required a detailed look at not only the company's overall financial operations, but many of the individual locations day-to-day business as well. With nearly 700 employees and annual revenue of $55 million, the organization knew efficiencies could be found, but they were hidden among hundreds of activities that kept the business running. Without a subject matter expert to closely examine every outgoing cost, large scale cost reduction would be nearly impossible. So, the senior care organization turned to the cost containment to fully implement an across-the-board cost reduction assessment and cost containment plan.

First, the cost reduction firm examined a breakdown of the assisted living facility's day-to-day operations. To reduce costs, the firm looked for key vendors the assisted living facility interacted with regularly. Many significant areas were identified as possible cost savings opportunities, which the cost reduction firm would then closely analyze. They identified key areas like their corporate office lease, medical supplies, janitorial supplies, security services, laundry services, grounds maintenance, waste management, and more.

The next step for the firm to take was to review their findings on possible opportunities with the client, and discuss the best way to move forward. The firm then began obtaining quotes from new vendors and negotiating with current vendors, leveraging the strength of the established relationship to find a price point that would work for the vendor but also that would reduce costs for the assisted living facility.

These are a few of the areas where the firm found substantial savings for the assisted living community.

Item Annual Savings Corporate Office Lease $74,000 Medical Supplies $71,000 Janitorial Supplies $25,947 Security Services $23,717 Grounds Maintenance $22,072

Total annual savings amounted to nearly $265,000.

Taking an in-depth look at the financial operations of an organization can be a daunting task. But by hiring a third-party cost containment firm, the company can gain a wealth of knowledge while positively impacting the bottom line. Just as hiring a cost containment firm proved to be beneficial for this assisted living facility, seeking professional help in cost reduction can help any organization achieve long term success.


About Author Miles Lee :

Alliance Cost Containment is a national service firm that reduces the indirect operating expenses for mid-sized businesses and organizations within a wide range of industries. ACC delivers to its clients measurable cost reduction and operational efficiencies in over 30 common expense categories. Find out more about Alliance Cost Containment at <a href="http://www.alliancecost.com" target="_blank">http://www.alliancecost.com</a> .


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Article Added on Sunday, June 16, 2013
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