Answering To Your CFO Knowing Your True Costs Presented By Monica Haddox What will be covered in this Webinar? A: Finding your true costs and Part projecting need PartB: Measuring your cost projection vs. your actual costs Where do I start? Create a team Know your history Brainstorm Create a system of measurement Test your system What are costs? - Human Capital - Outsourcing of any kind - Supplies and Materials - Technology ANYTHING that takes money or time is a Cost! Have you seen this look? CFOs have to answer to someone, too! Being within budget gives you bargaining power! Having a plan allows everyone to relax! How can you project the future need? Lookat the business plan for the future of the hospital/MTSO Align your goals with the overall goals of the facility Identify the role your department plays in the business plan Address the needs of the business plan vs. your current resources to project potential future costs within your department Business 101 SWOT analysis Strengths Weaknesses Opportunities Threats How can this help me find my costs? Obstacles in the “Road”. Unplanned costs can be crippling Budgetary cuts an be unplanned Changes are inevitable! Is it time to choose New Technology? How much does the tech cost? Interfaces or other cost when switching? How long will switch take? What is the game plan in the mean time? Managing the Work- Being the Outsource Managing work- what to do with new accounts and how to budget Costs of overhead Payroll Training Other client needs that are your responsibility? Outsourcing Negotiate, negotiate, negotiate! Create a solid contract Have definitive terms and limits on contracts Be realistic! What is the largest piece of your “budgetary Pie”? Human Capital, or Technology? Human Capital Howmuch can you expect from your employees? Do you have a clear job description for your employees? Do you measure their performance? Does their job create overhead, or cost savings • Is the overhead necessary • What is the actual cost savings vs. cost of employee? Employee vs. Contractor How much do your employees cost? Do you provide health insurance? 401K? Other employee benefits? Cafeteria privileges, PTO, vacation time, expenses? Calculate all benefits into the current pay of your employees and that is the total cost of the FTE (full-time employee) For instance…. Pay per hour- $11.00 x 40 hours= $440 401K cost- 4% of $440= $17.60 PTO accrual per week- 1 hour= $11 Health Insurance- $250/4= $62.50 Federal/Unemployment taxes- $52.80 Total per week= $583.90 Per year before benefits= $22,880 Per year after benefits= $30, 363 A difference of $7483 per year, per employee Contractor Costs How much does your contractor actually cost? How are they paid? Cents per line? Flat rate? Do they need support from your staff? • How much time does your staff take to accommodate contractor needs? • Can you streamline the process with automated processes, training or information? • Do their services require you to pay extra technology fees? Another for instance… Contractor pay is 10 cents per line and reports are generally 5 minutes long 12 lines per minute x 5 minutes x .10= $6.00 Technology costs 2 cents per line= $1.20 Total report cost by contractor = $7.20 Does your staff have to handle the report after the document is returned? How long does it take the staff member per document? Add this to the total cost of the document Technology: Help or Hinder? Does your technology address your needs? Do you have to perform other tasks outside of your technology that you feel should be addressed by your technology? Good rule of thumb: If you have a repetitive task that can be addressed by technology, you should find a program or as your IT department to help you create a program to address your needs! Don’t forget, time is money and technology should be helping you make money- not costing you time or money Reporting Capabilities Do you have the reports that you need? Areyou using your technology to its fullest potential? Ask your vendor! Howdo you request upgrades from your vendor? How do they notify you of upgrades? Controlling Costs Howcan you control rising costs, but still engage your employees? Promotion from within Training Non-monetary incentives Controlling Costs Cont. How do you get the most from your outsourced contracts? Contractual obligations Training period- how long is too long? Plan with your contractors- establish communication More Costs! Technology- how can you cut costs? Do you have annual contracts or costs associated with technology? Do you have maintenance fees with your current contract? Can you find another program without the costs? Food for thought… Other business expenses 1. Marketing 2. Advertising 3. Working Business expenses 4. Recruiting 5. IT 6. Other What about Growth? What do you need to approach your CFO? A strong and realistic plan Accurate numbers and costs from a reliable source Good communication Time frames and landmark goals Proof of ROI (return on investment) Reverse engineering your budget to find your true costs Cost of transcription- Costs of personnel Technology Outsourcing Quality review Training Other transcription related costs such as hardware, etc. To review… Employee Costs Per line of Contractor Costs per line of transcription- transcription- Pay per hour- $11.00 x 40 hours= Contractor pay is 10 cents per line and $440 reports are generally 5 minutes long 401K cost- 4% of $440= $17.60 12 lines per minute x 5 minutes x PTO accrual per week- 1 hour= $11 .10= $6.00 Health Insurance- $250/4= $62.50 Federal/Unemployment taxes- $52.80 Technology costs 2 cents per line= $1.20 Total per week= $583.90 Total report cost by contractor = $7.20 Per year before benefits= $22,880 Per year after benefits= $30, 363 Does your staff have to handle the A difference of $7483 per year, report after the document is per employee returned? How long does it take the staff member per document? Add this to the total cost of the document Reverse engineering continued Total budgetary costs per annum Total from last year, or Projected costs Add projected need and growth Don’t forget things like raises, technology, and training Keep an eye on the Business plan Monitor spending Allow for changes and increases in your budget Thank You! Questions?? Have a wonderful day!