By Nicole Dhanraj
February to March are usually the months I set aside time to start ramping up for the next fiscal year’s budget planning. However, after COVID-19 disintegrated the last two years of my budget, I still try to determine what tools are available for predictive analysis when it seems like the unknown is now the only known we can confidently predict!
OK, so you can tell that I am concerned about preparing a budget forecast. We thought there would be two waves, then a third came, and honestly I am unsure which wave we were in, but it seems like we are stuck on repeat. So, as I am tasked to prepare my budget, I ask myself, how do I plan? Sheesh, should I even plan knowing that my labor and supply costs will be disseminated? No matter how much I try to extrapolate data from the last few months to the past two years, one thing I can be sure of is that it won’t be accurate.
The modus operandi for budget planning is to look at past performance and future growth; however, the pandemic crushed this concept in multiple ways, reminding us that past performance is not an accurate indicator of future performance. Well, no, we know this … this is why there are contingency funds and a margin to allow for some variations to your budget. But over the last two years, these safety cushions were blown to smithereens, causing us to bootstrap our operation so tight, wondering which was strangling us more, the pandemic or our actions.
Well, here again, another budget planning, and boy am I shaking my head and wondering which direction do I go … so here goes my attempt to see a sliver of stability in my budget for FY 23. These are my current considerations.
Current state and future state of labor: My prediction is that labor shortages of this nature would last another 18 months at a minimum. Travelers will be my method of staffing. I predict we will staff for anywhere between 30-60% of our imaging departments, especially in rural areas with travelers. The lure of the travel rates, the desperation organizations face, the increased patient volumes, labor costs, in my opinion, have not yet peaked. The Great Resignation is not yet over. We have employees who are still watching this traveler phenomenon and preparing to make their move. In addition, organizations had to be creative to retain staff, offering higher pay rates, incentive programs, and bonuses on top of bonuses. Labor goes to the highest bidder is the strategy these days. So, to reduce the further strain of attrition, employees will continue to squeeze organizations to show me the money if the organization desires their services to mitigate the shortages and support the increased volumes.
PTSD and burnout: Imaging professionals, specifically those in hospitals, have been scarred significantly by the internal challenges brought on by COVID. The lack of PPE, the longer hours of wearing PPE to protect from COVID, being apart from their families as they worked with COVID patients, and just the mighty and exhaustive efforts to keep the doors open with all their might, I am afraid there is a long road to recovery. We may never see some colleagues return to the hospital environment, and it may take a while to entice the younger generation to give these places a try due to the horror stories. There is a higher probability of attracting candidates if we are ready to shell out the big bucks for the best work-life balance and best experiences. Depending on our entity, patient population, and geographic location, this benefit package may not be something we can readily offer.
Financial sustainability: Organizations with smaller operating margins or just consistently sliding deeper into the red will have to tighten their purses more than ever, especially if they do not have the opportunity to merge with a more extensive system. So, for now, imaging departments in these areas may not be able to consider any expansion of services, acquisition of capital equipment or contract services.
Here are my considerations:
1. Consolidation is key. Focus on your core services. You may consider partnering with others to offer additional services that you cannot support.
2. Evaluate your department for equipment redundancy. If you have redundancy such as two CT scanners, five portables, etc., you could probably eke out a few more years from aging equipment relying on the additional backup equipment should something go out of service.
3. Remove costly service agreements (sorry, my OEM colleagues), especially on newer equipment. Consider going to time and materials but of course, review the contract agreement to determine coverage levels to determine what is most cost-effective to your department. However, do not dismiss the opportunity to get cost effective service contract deals giving us more than we may have been accustomed. Don’t be afraid to negotiate aggressively. We are all trying to survive.
4. Supply Chain Woes. These challenges will continue into the next fiscal year until these folks catch their breath from the last two years, so expect continued higher shipping costs and supply shortages, which translates to ulcer-producing increased costs which we may or may not be ready to pass onto our consumers. On the bright side, this challenge forces us to be attentive to our wastage and thus extract as much value as possible from our spending.
5. Regulatory compliance. As we initiate or maintain federal or state compliance, we will prioritize where we focus. Therefore, priority will go to areas’ resources that are needed to support compliance. In addition, changes in the industry may cause operational changes. One such example is USP 825, which, as of now, has no final date for implementation, but as I prepare for this change, consideration is considered as it relates to radiopharmaceuticals expenses, delivery charges and wastage until I can predict more accurately.
What are your considerations as you start your budget planning this year? I will focus on core services that will drive the mandatory equipment needed, the core supplies to support the services we will provide, and the ravenous labor costs, to include a more extended term usage of a short-term incentive plan (really, I am genuinely not being sarcastic).
Like the pandemic played ninja across my budget, I will slash many columns on this budget spreadsheet.
My focus will remain on labor, supplies and contracts. See, I no longer have or can control these costs, but though all control is lost, my focus is to be hyper-focused on core elements of the budget and ride this mechanical bull till it fizzles out.
Nicole Dhanraj, Ph.D., SHRM-SCP, PMP, GPHR, CPSS, CRA, R.T(R)(CT)(MR), is a radiology systems director for Northern Arizona Healthcare.
