Best practice benchmarking in order to analyze operating costs in the health care sector

Abstract

Purpose

The purpose of this paper is the introduction of a best practice tool in order to analyze operating costs in the health care sector. This study presents the findings by using a new innovative benchmarking tool to analyze operating costs, identify cost drivers and highlight the potential savings.

Design/methodology/approach

The paper focuses on a survey of operating and maintenance costs from 18 residential homes in Tyrol, Austria. In order to determine the volume and to prioritize the cost drivers, CAREB (Computer‐aided Real Estate Benchmarking) software was used, which was developed by the Institute of Real Estate Benchmarking at the University of Applied Sciences KufsteinTirol, Austria. Statistic analysis was conducted to investigate savings potential, determine the best case of the sample and submit recommendations to the decision‐makers.

Findings

Compared to conventional benchmarking methods, this model allows a holistic view on the key factors of cost drivers and reveals the savings potential for each dimension. The key figure which reveals the largest potential gives an indication of whether a residential home has general problems with efficiency (high costs per bed), with occupancy (costs per resident) or with the space efficiency (costs per average space consumption). Furthermore, the study reveals the immense savings potential in the costs of various services.

Research limitations/implications

The paper identifies the volume and structure of the cost drivers of operating costs of buildings in the health care sector by using a new innovative benchmarking tool. This survey is based on the operating costs. Other running costs such as costs for health care personnel as well as quality indicators are not considered in this survey.

Practical implications

The results should help to establish cost benchmarking increasingly and develop it as a strategic planning tool in order to support management in the health care sector in the decision‐making process.

Originality/value

The paper presents a new measuring method which allows a holistic view of the influencing cost factors to investigate weak points in cost efficiency for the health care sector.

Citation

Madritsch, T. (2009), "Best practice benchmarking in order to analyze operating costs in the health care sector", Journal of Facilities Management, Vol. 7 No. 1, pp. 61-73. https://doi.org/10.1108/14725960910929574