“Unfortunately, its just the cost of doing business!” Most companies tally approximately 15% of revenue to overhead expenses, and all too often assume that this exasperating rationalization is just a given. Whether it is freight or transportation costs, office consumables, merchant card fees, insurances, supplies, uniforms or other fees, once an organizations negotiating wizards reach a financial deal, its assumed that youve got a sunk cost.
Expense Reduction Analysts (ERA) recognizes that overhead is often money well spent but cost inefficiencies can detract from market advantage positioning. ERA helps companies reduce overhead expenses by an average of 20%, and provides the service on a contingency basis, in effect providing a risk free analysis. .
According to Emily Gonzales, one of ERAs So Florida Regional Directors, ERAs 700+ consultants are usually in the third or fourth quarters of their careers and offer a breadth and depth of hands-on experience in all non-personnel cost categories to impact an organizations bottom line. Also, because ERA maintains an international presence, they can provide pricing and tactical cost reduction intelligence from a wider market landscape. Competitive market dynamics, that is data regarding the total market floor vs. a local market pricing, brings an added dimension to negotiations. And, as vendor neutral consultants, ERA can offer objective cost and quality comparisons for the stakeholders decision making. The analysis does not necessarily mean a vendor change but instead, often a renegotiation of costs and needs.
ERA focuses on providing strategic management of overhead costs based on a volume and quality of data that corporate CFOs can not easily access. Then ERA specialists can often help companies find ways to work more efficiently to achieve a better overall price.
Typically, ERA consultants first address where the client is feeling the pain which is often from a portfolio of approximately 100 categories. Then when performing the analysis, other hidden issues may surface. Cost and tactical decisions are closely related when considering overall pricing. When budgeting for uniforms or instruments, for example, a decision of disposable vs. reusable has a significant cost & operational impact to consider. ERA experts can provide best practice case studies complete with financial impact to provide an in-depth comparative knowledge base for decision makers.
Use of Group Purchasing Organizations (GPOs) is also reviewed for improved pricing. For example, packaging or bundling of service costs is typically considered a practical cost buster, but depending on a user analysis, ERA has demonstrated that unbundling some services can bring reduced pricing depending on utilization. Following an ERA recommendation, all resolutions are based on informed-decisions including a review of their impact on patient safety, patient satisfaction, service growth and ancillary revenues, according to Gonzales. Every analysis considers value, not just cost– that is the best pricing for the most acceptable quality.
ERA consultants combine their resources and knowledge to assist internal experts with an objective analysis and implementation strategy supported by demonstrated industry benchmarks. Then with client input they help maximize the bottom line and often improve operational efficiency in the process.
“A cost reduction specialists specificity and thoroughness of review will ultimately level the playing field putting their clients in a position to negotiate the best deals based on their individualized experience and evidenced-based need,” Gonzales summarized.
