What would your aged care business do with an extra $30k?

In aged care, and particularly in 2023, the biggest mistake you can make is having a set-and-forget mentality around expenses and procurement.

Now, I know what you’re thinking... “Who has time to take a deep dive into every expense?? I’ve got so many other things to do and so does my team.”

I totally understand this feeling... but when you consider that a review is more than likely to save you money without you having to reduce the quality of the products and services you provide, it’s worth it.

To share an example, here is a breakdown of an expense review I recently completed for an aged care client into just one category: continence supplies. These aren’t the most glamorous products, but if you’re an aged care expert you’ll know that as well as being essential for hygiene and dignity, they can cost your business a lot of money.

AGED CARE EXPENSE REVIEW CASE STUDY

The client

This client is a medium-sized aged care provider in Melbourne that provides disability support services, aged care support, NDIS coordination, and business and community programs. Their mission is to create and deliver innovative services and support that empowers people to reach their full potential. The project I helped with was within their Aged Care division.

The task

As a category cost consultant, I stepped in to conduct an unbiased and comprehensive industry review of “best in class” industry service levels of their Continence Management Consultant (CMC) and Distributors in comparison to their current standards.

I was also engaged to provide recommendations for improvements to this organisation’s product selection, stock management and ordering process, to check all were in line with industry benchmarks.?

During our initial discussions, we talked about how continence products is a cost category that is more about quality and service than price. Firstly, the continence products have to be fit for purpose. Next, the client needed to have trust in their Continence Management Consultant (CMC) to make sure the most suitable products were recommended, and the Distributor needed to have superior stock management systems and processes in place to ensure products are delivered on time and in full.

The outcome

As part of my review, I determined that the current branded Continence products and service levels of their Continence Management Consultant (CMC) were within “best in class”, which was great news.

However, what I did discover was that things could be improved in terms of distribution. As a result of my intervention, a new Distributor was appointed with superior account management procedures and an innovative inventory control management system.

Now to the money part:

Prior to my review, the client had spent $184K on continence products over the last 24 months.

After conducting an in-depth analysis based on industry knowledge as well as pricing and reviewing that what was being supplied matched what was in the contract, I was able to reduce this by just under $30K for the same time period... a saving of 15.80%.

This result, from project launch to implementation and savings being banked, was achieved in 12 weeks.?

In addition to savings, the client experienced:

• Enhanced support from the Manufacturers CMC in product training and speed to new innovative products that are fit for purpose to meet the changing needs of residents.
• Improved processes and service levels from the Distributor – streamlining the client's procurement process and stock management.

The outcome actually came as a surprise to the client. They hadn’t considered the ‘soft savings‘ of procurement and stock management, as this is where money was also going down the drain. My analysis found that a number of staff had been spending a great deal of time segmenting products when they arrived and doing stock takes. The new distributor set up minimum stock on hand levels and their delivery drivers would stock products. The only action needed by the client was to have one team member quickly do a whip-around to the storage areas post-delivery to confirm the order had arrived.

Why it worked.

The executive leadership team at this busy organisation didn’t have the time to take a deep dive into cost analysis but they knew the potential existed to cut costs without compromising on quality.

They had previously called in various manufacturers and distributors to propose their services for the business, but marketing materials made it difficult to significantly differentiate. Also, there was no significant pricing differential between invitees.

Flipping the solution and calling on an Industry based category and procurement specialist helped because:?

• I could provide comprehensive industry-based knowledge to objectively and independently review??“best fit” options for the business.
• I had access to the resources that allowed me to focus on the project so key stakeholders could concentrate on core responsibilities
• Once on board, I could identify other areas, such as food and beverage, where the business was spending money unnecessarily.

What’s next for you?

If you own or oversee an aged care/disabled care facility, staying within budget is one of your biggest challenges and a constant source of stress.

By getting help in this area, you can achieve financial outcomes that more closely match forecasts and expectations, without losing hours of your own time.

Want a comprehensive review of your suppliers and distributor costs? Get started with a SpendVue Assessment, a free tool that will review your spending against industry benchmarks.?Based on the results, I can help you identify a pathway to immediate and actionable cash flow improvements.

To find out more, send me a message on LinkedIn or email [email protected]