Applying Cost Accounting to Hospital Print for Optimal Value

As hospitals respond to unprecedented pressure to improve efficiency and reduce costs resulting from the industry’s shift to value-based care models, they continue to look for new ways to drive value. Yet few of them recognize the potential of their print environments in this endeavor. By applying the principles of cost accounting to print, hospitals can gain key benefits, such as optimal cost savings, right-sizing of devices, and, most important, visibility and transparency into the volume and costs associated with print-related workflows.

Cost accounting principles can be easily applied in most areas of the hospital environment, where the underlying cost and volume drivers are elements such as drugs, supplies, labor, admissions, and discharges, because there is concrete visibility into these elements. By applying these principles and having visibility into the costs and usage drivers, organizations can better understand and act to improve operational efficiency, ultimately driving out unnecessary costs.

The healthcare industry has spent tremendous time, effort, and money implementing comprehensive systems in recent years, with the electronic health record (EHR) being the most significant. It may seem natural, then, to assume print production would decline; however, research shows that, on average, the use of print in health care industry has increased 11 percent since the introduction of EHRs. Because print can represent a significant expense, it also can provide a significant opportunity for reducing cost and improving operational efficiency, while also mitigating risk related to security and privacy.

Consider how applying three principles of cost accounting—cost collection, data analysis, and alignment of cost with services—can help healthcare organizations understand and reduce print costs without sacrificing efficiency.

Cost Collection

In the case of print, it is not enough to simply know the utilization rate. Hospitals must ensure that utilization rate includes all costs, both fixed and variable (ideally, it should be possible to translate these costs into a single variable rate). An organization should have cost information for all aspects of print, including the following:

• Hardware—leases and acquisition costs of all devices (copiers, printers, fax machines, thermals, and scanners)
• Consumables—toner, parts, and paper
• Labor—internal and external labor for the support of the entire print fleet, help desk for print related calls, and back office for tasks such as invoice processing, vendor management, purchase orders, and RFPs.
• Extended document lifecycle costs—including shredding and long-term document storage

Data Summary and Analysis

For effective cost accounting, the data should provide a deeper level of insight than simply considerations such as which device is used and whether copies are in black and white versus color. The data analysis should be actionable to drive savings. For example, understanding what is causing the usage (e.g., why a particular device or the color option is being used) allows an organization to identify strategies to eliminate unnecessary or inappropriate usage. Technology exists today to know not only which department printed a document but also who in the department printed it and from what application. This specificity allows for intelligent decisions to drive out unnecessary volume and visibility into workflows that are driving volume.

By driving out volume, an organization can reduce its need for printers, consumables, and labor, resulting in fewer devices to secure and less paper lying around that may pose a security or privacy issue.

Alignment of Costs With Services

Once an organization understands what it is printing and why, the print-related costs can be aligned with the services it is delivering to provide a clear understanding of how print affects the cost to provide those services.

Given the ever-tightening margins they face in today’s shifting payment environment, healthcare organizations should recognize the potential benefits to be gained from analyzing the impact of their print environments on their bottom lines. Using effective cost accounting, they can fully realize those benefits in both improved value and increased savings. 

Sean Hughes is executive vice president of managed document services, CynergisTek, Austin, Texas.