Institute for Healthcare Improvement (adapted from Sigma Aldrich)
Cambridge, Massachusetts, USA
The Quality Improvement Savings Tracker Worksheet may be used throughout the organization to track cost savings associated with waste reduction efforts and to adjust for annual changes. The tool enables the organization to compare expenses in the area of interest to expenses incurred the year prior and adjust for wage increases and productivity/volume changes. The organization can then use the worksheet to track any investments made with the savings accrued.
By using this worksheet tool across all projects, savings can be calculated regardless of the area of improvement. By requiring that the details of the savings are written out in terms of process improvement, this tool reinforces that the goal is not traditional cost cutting but rather waste removal through redesign. Finally, a key to identifying “dark green dollars” is to make a concerted decision as to how the funds will be reinvested; this tool creates a public space for that decision.
See the related IHI white paper, Increasing Efficiency and Enhancing Value in Health Care: Ways to Achieve Savings in Operating Costs per Year.
Distinguishing between “light green dollars” (potential savings) and “dark green dollars” (actual savings on the bottom line) that result from an improvement project — and understanding the process by which the former are converted to the latter — are crucial in an organization that wants to enhance value. Doing so requires a clear method for making that conversion and for tracking costs across the organization; a clear sense of potential savings before the project begins; and an expectation of how savings will ultimately be applied.
The Quality Improvement Savings Tracker Worksheet was created by Sigma Aldrich, a life science and high technology company, to support their cost-reduction efforts. Sigma Aldrich developed a simple Excel worksheet that can be used in any division, in any plant, and in any country to track savings.
IHI adapted Sigma Aldrich’s Quality Improvement Savings Tracker Worksheet to fit the appropriate components for tracking health care delivery costs.
There are nine steps to complete in the worksheet:
- Complete the “Department, Location, Currency, and Prepared By” information in upper right corner.
- Select the reporting month from the drop-down menu.
- Select the appropriate account(s) from the drop-down menu where savings has occurred.
- From your department/location expense reports, record the year-to-date (YTD) expense from this year and last year for the appropriate month.
- For savings in Payroll costs, input the estimated annual wage increase for the current year.
- Input your productivity measure amounts for this year and last year. Remember to use the YTD amounts for the month selected in step #2.
- Complete the details of savings for each significant process improvement project.
- Complete the details of reinvestments from savings achieved in the project.
- Briefly describe the unit of measure for the productivity measure used in step #6.