Richard's Blog

 Archive for the ‘cost savings’ Category

I am frequently asked about cost savings from using Therap.  There seem to broadly be at least 3 type of cost savings.

One type of cost savings is reductions in paper, gas costs, mileage reimbursement, copying expenses, mailing expenses and other direct clear third party costs which are clearcut savings. It turns out that just these categories alone can more than pay for the cost of Therap. Plus I once calculated a side benefit of saving one tree per year for 7 individuals who have their documentationo on Therap.

A second cost category of cost savings is sometimes harder for agencies to see.  Agencies tell us nurses can save one to two hours a day. However, if an agency only has 3 nurses, they may not be able to eliminate a nursing position. So the savings are more in improved efficiencies.  A similar situation occurs if a DSP saves an hour driving paper around in the middle of their shift. You can give the DSP time off – but hopefully there are other benefits of this increase in time available from a decrease in driving.

There are many other types of savings which can be problematic to exactly calculate. Allison had an example today she wrote about in her blog.

She visited an agency which said

that since starting the MARs, their med errors have dropped to nearly zero–that would be none, nada, zilch, nothing. It could certainly be attributed to the immediate review that online documentation allows, along with some careful planning and implementation on Pathway’s part…

Obviously there are quality of life benefits to not having med errors. However, what is the cost savings to an agency. What is the cost of reporting med errors. What is the cost of investigating med errors.

My sense is that when agencies are running their cost analysis they are not factoring in these type of benefits when doing a line by line benefit. Agencies are seeing these benefits when looking at the total budget impact of using Therap. I received an email recently from a longtime user who wrote

We continue to use Therap now more than ever as communication is essential when we have Supervisors spread so thin these days.  (we are down to 4 Managers as opposed to the 9 we used to have)

In what ways can we help create relevant cost savings analyses?

jI just read the book “Software as a Service Inflection Point: Using Cloud Computing to Achieve Business Agility”.

A few quotes and thoughts from the book.

Page xxvii:  According to Rob Markezich, Corporate VP of Microsoft, customers of the  SaaS model have saved anywhere from 10% to 80% on the cost of their infrastructure.

Another point he makes is one  I find often when dealing with providers of service to people with developmental disabilities who are analyzing Therap vs other home grown systems.  Agencies do not know how to calculate their costs of various options.

Melvin Greer wrote:

“The second key element in the cost benefit analysis of SaaS applicatinos is the underestimated people costs associated with running premise-based traditional software applications. … “We don’t know how to estimate our people services, so we chose not to consider them when comparing the costs of WebEx vs the premised-based software alternative”.

While this sounds like an inaccurate, poor way to do cost benefit analyses – we see this quite often. Agencies often don’t factor in costs of their committees and people’s time when analyzing alternatives and in particular developing their own system.

One agency once told us they spent $100,000 on a system when our cost to them would have been about $20,000 per year. I then asked what that $100,000 included – they said it only included checks to outside programmers and upfront equipment. They did not count any of their people time or costs to develop. And they had not factored in future development costs.

He finally made the point that

Another argument for “owning” software has been that even with the higher upfront costs, there is a break-even point where traditional software becomes less expensive than the SaaS subscription model. The analyst from IDC reviewed several SaaS versus traditional software deployments and found that when people resources and cost of upgrades are correctly taken into consideration, this break-even point may never be realized.

We have many users who have told use they are saving significant money by using Therap.  The most questions we get on budget affects is actually from non-users who don’t see the full benefit of the system – in large part because they are not doing the proper full cost analysis.

I would be interested in hearing more stories and examples of how agencies are performing their cost saving analysis.

Reuters recently had an article on the nursing shortage. They mentioned over 216,000 nursing jobs currently unfilled. This is in the middle of the current economic recession that they are not filling those jobs.

For years we have been hearing about a nursing shorting for agencies serving people with developmental disabilities.

As I have been talking with people about cost savings – one item I constantly hear is that nurses are saving 1 to 2 hours per day when using Therap.  Sometimes this leads to direct savings when agencies choose to reduce a nursing position.  In other instances it frees up nurses to focus on quality issues or increase direct interaction.

Nurses at agencies which use Therap Health Tracking in particular are saving the most time. Quarterly nursing reports which used to take several hours can now be automatically generated in under 1 minute.

Also nurses are reporting that they are spending significantly less time driving to see pieces of paper.

Once again – just the nursing savings can more than pay for Therap.  If an agency has one nurse for 45 individuals. The nurse earns $65,000 a year including fringe.  Thats an allocated cost of $1444 per year per individual for nursing costs.  If nurses are saving 20% of their time. Thats $288.88 per year per individual.

What are people seeing in your operations.  Are nurses happier? More productive? How has their routine changed? Is it easier to recruit or keep nurses? Have their been cost savings – either in wages or mileage reimbursement?