Reducing Burn Care Unit Operating Costs

Strategic Recommendations for a Reduction of Operating Costs for Burn Care Unit

Burn Care Unit is a healthcare organization operating the 40-bed unit. Since its formation, Burn Care Unit business has been profitable with an increase in revenues, however, the organization has faced challenges in recruiting the professional nurses, which forces them to adopt the Baylor plan. The plan is an overtime policy that adopts 36 hours pay for nurses who work for 24 hours on the weekend. Nurses who work for 60 hours in the weekdays are paid the equivalent of 70 hours. However, the company has recorded high cost of operations because of the policy. Moreover, Burn Care has incurred $800,000 in nurses' payrolls because of the Baylor plan, and based on the recent increase in the costs of operations, the accountant has suggested that the CEO should discontinue the Baylor Plan to reduce the costs of operations. While this option will assist the organization to record a significant reduction in the operating expenses, the option will provoke the nursing strikes, which may make some nurses leaving the organization. Since this strategy is not cost-effective, the study evaluates other options to reduce the operating expenses.

The objective of this report is to evaluate different alternative strategies that will assist Burn Care to reduce the operating expenses by $500,000 without provoking the nursing strike. The report evaluates an improvement of information systems or adoption of the outsourcing strategy. The outsourcing strategy involves transferring the non-core activities of the Burn Care Unit to a third party. The study reveals that the organization can outsource non-core activities such as housekeeping, food services, facility management, and Bio-Med. Burn Care Unit can also outsource IT services that include scanning/imaging services, mail services, document processing, storage and retrieval services. The adoption of the outsourcing strategy will assist Burn Care Unit to realize cost savings of $2.99 Million yearly. The downside of this alternative is that the organization can face resistance from the affected staff, which may provoke a strike from non-clinical staff. Moreover, some outsourcing vendors are not reliable. Burn Care can face a disappointment from the outsourcing contract if the contract agreement is not drawn by a professional. Thus, the study does not recommend the outsourcing strategy as the best alternative to realize cost savings from operating expenses.

An improvement of the information systems is another viable strategy that the organization can employ to reduce the operating expenses. This option involves upgrading the company information systems and integrating electronic medical records. This strategy will assist Burn Care Unit to record a significant costs savings because the organization will perform the large volume of operations with fewer resources. Moreover, the strategy will improve the efficiencies of nurses, and enhances the organization quality of care. The EHRs will assist the organization to realize costs savings from a reduction in transcription services, a reduction in pulling paper charts, and eliminating the paper medical records. The system will also allow the nurses to create a template for ordering medications and type in notes. While Burn Care will invest $700,000 to upgrade the information systems, the organization will record one- time savings of $375,800 with annual savings of $541,662 from the alternative strategy. Moreover, Burn Care will realize $2,000,787 from business and IT savings within three years.

The report recommends that Burn Care Unit should choose an improvement in the information systems because this is the only viable strategy that will assist the organization to record cost savings without provoking the nursing strikes or conflict within the organization. However, the report suggests that the Burn Care should outsource some aspect of the IT services to enjoy significant costs savings. However, choosing a right vendor to upgrade the information systems may still be challenging. The organization should choose a reputable vendor that has experience in the IT to enjoy full costs saving benefits from the information system improvements.

Problem Analysis

A multi-unit corporation in Georgia has been recognized nationally for its Burn Care Program. The corporation established the program in 1978 with 20 beds in 1978. However, the units were able to expand the facilities to 40-bed units making the program to be highly financially rewarding. Nevertheless, the hospital has faced challenges in the last three decades because the unit has experienced the nursing shortages, moreover, the burn care program also suffered the staffing problems. The issues made Burn Care Unit to implement the Baylor Plan designed for nurses 12-hour shift every weekend, and weekdays. Nurses who worked for 24 hours get paid for 36 hours with full benefits based on overtime policy. Thus, nurses who worked on weekends are prohibited from working on weekdays. During the weekdays, nurses are paid with full-time benefits based on overtime policy. Moreover, nurses who assigned the work weekdays for 5 continuous days were off for next two weeks (next 9 days). Since the introduction of Baylor Plan, the hospital is experiencing rising costs with the operating costs totaled $800,000 in nursing payrolls. Thus, the management has decided to reduce the operating expenses without jeopardizing the quality of care.

The objective of this project is to implement is to develop a strategy to reduce the operating costs by $500,000 without provoking the nursing strikes.

1. Estimating the Hospital Annual labor cost of Operating the Unit

The report estimates the annual labor operating costs by calculating the number of hours of three groups of nurses. The study makes the following assumptions to estimate the total number hours all employees work last year:

First, the paper assumes that HN worked 168 (1*12*14) hours per year pay period. The USs worked 672 (4*12*14) hours per year pay period. Thus, the report calculates the remaining hour based on the percentages of the different nursing category:

• 76.0% to RNs,

• 16.0% to LPNs, and • 8.0% to NAs.

For agency hours, and flex-pool, the paper assumes the same percentage distributions.

The study also assumes that FTE (full-time equivalent) employees work 40 hours weekly or 80 hours per pay period. The FTE data for last year was taken from the "Census and Acuity Data by Pay-Period" (Shukla, 2000 p 2) table to estimate the number of hours worked for each pay period. Thus, the hourly rates for the hospital regular staff is assumed as follows:

Baseline Cost Estimate

Hourly Rate REGULAR Staff

6 am-2pm

2 pm -6pm

6 am-10 pm

10 pm -6 am

HN

17,50

17,50

RN

14,50

16,00

16,00

17,50

LPN

9,80

10,80

10,80

11,80

NA

6,50

7,50

7,50

8,50

US

7,50

8,50

8,50

9,50

Based on the calculation, the hourly rate between 6 am and 6 pm is 8 hours. Thus, the average hourly rate for 6 am -- 6 pm group is based on 8 hours at the first rate and 4 hours at the second rate divided by 12; while the average hourly rate for the 6 pm -- 6 am groups is based on 4 hours at their first rate and 8 hours at their second rate divided by 12." (Shukla, 2000 p 2). The table 2 below reveals the proportion of a number of hours worked on the first shift (6 am -- 6 pm) and on the second (6 pm -- 6 am) shift.

Table 2:

Daily Staffing Pattern (in hours, by shift)

HNs

RNs

LPNs

NAs

USs

6 am-6pm

12

48

48

24

6 pm-6am

0

48

0

24

Daily

12

96

48

48

Percent 6am-6pm

50%

50%

50%

Percent 6pm-6am

0%

50%

50%

0%

50%

The next process is to calculate overtime costs with 0.30 per regular hourly rate.

Hourly Rate REGULAR Staff

Percent of Hours

Regular Employees

6 am-2pm

2 pm -6pm

6 am-10 pm

10 pm -6 am

1st Shift

2nd Shift

Average

Regular Pay

Hourly Fringe Costs

Average Hourly OTCosts

Fully Loaded Hourly Rates

HNs

4368,0

17,50

17,50

0%

17,50

5,25

22,75

RNs

140217,0

14,50

16,00

16,00

17,50

50%

50%

16,00

4,80

20,80

LPNs

29619,4

9,80

10,80

10,80

11,80

50%

50%

10,80

3,24

14,04

Nas

14759,7

6,50

7,50

7,50

8,50

0%

6,83

2,05

8,88

Uss

17472,0

7,50

8,50

8,50

9,50

50%

50%

8,50

2,55

11,05

Regular Employees

RNs

11831,7

16,00

17,50

17,50

19,00

50%

50%

17,50

5,25

n/a

22,75

LPNs

2490,9

11,30

12,30

12,30

13,30

50%

50%

12,30

3,69

n/a

15,99

Nas

1254,4

7,50

8,50

0%

7,83

2,35

n/a

10,18

Agency Employees

RNs

9196,0

22,00

24,00

24,00

25,00

50%

50%

23,67

n/a

23,67

LPNs

1936,0

16,00

17,00

17,00

18,00

50%

50%

17,00

n/a

17,00

Nas

968,0

12,00

13,00

0%

12,33

n/a

12,33

The next process is to estimate the overtime calculation where nurses work on shifts for 24-hour weekly and get paid 36 hours based on the overtime policy. When nurses work 60 hours for weekday shifts, they are paid 70 hours. The weekday and weekend shifts from 6 am to 6 pm shifts are 84 hours (7*12) work, and nurses receive a pay of 106 (36+70). On the 6 am -- 6 pm shift, nurses receive an extra bonus of 26.19% (106/84 -- 1), more than regular base pay in overtime. The overall calculation is revealed below:

Hourly Pay Schedule Cost

Percent of Hours

Regular Employees

6 am-2pm

2 pm -6pm

6 am-10 pm

10 pm -6 am

1st Shift

2nd Shift

Average Regular Pay

Hourly Fringe Costs

Average Hourly OTCosts

Fully Loaded Hourly Rates

HNs

4368,0

17,50

17,50

0%

17,50

5,25

4,58

27,33

RNs

140217,0

14,50

16,00

16,00

17,50

50%

50%

16,00

4,80

4,19

24,99

LPNs

29619,4

9,80

10,80

10,80

11,80

50%

50%

10,80

3,24

2,83

16,87

Nas

14759,7

6,50

7,50

7,50

8,50

0%

6,83

2,05

1,79

10,67

USs

17472,0

7,50

8,50

8,50

9,50

50%

50%

8,50

2,55

2,23

13,28

Flex Pool Employees

RNs

11831,7

16,00

17,50

17,50

19,00

50%

50%

17,50

5,25

22,75

LPNs

2490,9

11,30

12,30

12,30

13,30

50%

50%

12,30

3,69

15,99

NAs

1254,4

7,50

8,50

0%

7,83

2,35

10,18

Agency Employees

0,00

RNs

9196,0

22,00

24,00

24,00

25,00

50%

50%

23,67

23,67

LPNs

1936,0

16,00

17,00

17,00

18,00

50%

50%

17,00

17,00

NAs

968,0

12,00

13,00

0%

12,33

12,33

The next stage is to calculate the annual baseline costs revealed as follows:

TOTAL HOURS FOR YEARS

Average Regular Pay

Hourly Fringe Costs

Average Hourly OTCosts

Fully Loaded Hourly Rates

Regular Employees

HNs

4368,0

76440,0

22932,0

20020,0

119392,0

RNs

140217,0

2243471,0

673041,0

587576,0

3504088,0

LPNs

29519,4

318809,0

95643,0

83498,0

497950,0

NAs

14759,7

100858,0

30257,0

26415,0

157530,0

USs

17472,0

148512,0

44554,0

38896,0

231962,0

Regular Subtotal

206336,1

2888090,0

866427,0

756405,0

4510922,0

Flex Pool Employees

RNs

11831,7

207054,0

62116,0

269170,0

LPNs

2490,9

30638,0

9191,0

39829,0

NAs

1245,4

9756,0

2927,0

12683,0

Flex Subtotal

15568,0

247448,0

74234,0

0,0

321682,0

Agency Employees

RNs

9196,0

217639,0

217639,0

LPNs

1936,0

32912,0

32912,0

NAs

968,0

11939,0

11939,0

Flex Subtotal

12100,0

262490,0

0,0

0,0

262490,0

TOTAL ANNUAL

234004,1

3398028,0

940661,0

756405,0

5095094,0

2. Alternative Strategies for reducing Labor Expenses

This section evaluates three alternative strategies to reduce the labor costs. The three strategies are as follows:

• Discontinue the Baylor Plan

• Improving the information systems, and • Adopting the outsourcing policy.

Discontinue the Baylor Plan

The goal of the hospital is to reduce the operating expenses by $500,000. To achieve this goal, Mr. Adam suggests that the CEO should discontinue the Baylor Plan to reduce the Burn Care Unit's operating expenses. While this option will assist the hospital to reduce the operating expenses, the downside of the option is that it will provoke the nursing strike, which will make some nurses leaving the organization. As being pointed out by the "Head Nurse of the Burn Care Unit" (Shukla, 2000 p 2), the morale of nurses went down very fast when it was announced that the Burn Care Unit is considering discontinuing the Baylor Plan. Many nurses were considering a resignation, some of the nurses decided to go on strike. Thus, this option is not a viable alternative to reduce the costs of operations.

The report provides two effective alternative strategies to assist Burn Care Unit to reduce the labor costs from $800,000 to $500,000 per year. First, Burn Care Unit should improve the technical support systems, which is an effective alternative method to save costs. Typically, Burn Care Unit should invest in the information systems and communication systems to assist the organization to cut the cost of operations. Moreover, the organization should consider outsourcing non-core activities to cut cost and improve the quality of patient care. Meanwhile, the report evaluates the two strategic alternatives one after the other.

Improving TSS (Technical Support Systems)

The technical support systems consist of communication systems, information systems, and distribution systems. However, the health information systems are the wide array of data sources that include electronic medical records, computerized physician medication order entry and decision support systems. Hillestad, James, Katya, et al. (2005) argue that the major benefits of HIS (health information systems) are its ability to dramatically reduce the costs of operations, and greatly improve the patient care and safety. The authors substantiate their argument by pointing out that an organization that invests in the HIS will enjoy a significant costs efficiency because the organization will perform the same work with fewer resources. For example, if the most hospital and clinics adopt HIS in the United States, the potential saving for both outpatient and inpatients will be more than $77 billion a year. The largest savings are from a reduction in the hospital stay, and reduction in nursing administrative time, which leads to better scheduling and safety. The EHRs is integrated into the HIS, and EHRs assists in eliminating the paper medical records, and the Burn Care Unit will realize savings from a reduction in transcription services, and pulling paper charts. The costs saving will be realized by the reducing the number of staff doing the administrative jobs because the systems will be doing multiple tasks at the same time. The systems also allow the nursing professionals to create a template that will assist in reducing a significant amount of time spent in ordering medications, and typing in notes. Hillestead, Bigelow, Bower, (2005) support the argument of the previous authors by estimating the efficiency of savings from patient and inpatient in healthcare organizations in the United States. The estimated savings will be up to $77 billion that come from a reduction in the nurses administrative time, and reduction in hospital lengths-of-stay.

Outsourcing non-Core Activities

The outsourcing is the policy of an organization that allows third party providers taking some activities of the organization in order to focus on the core business. In the United States, the outsourcing policy has become the major business strategy that healthcare organizations employ to cut the cost of operations. Thus, outsourcing has become the major tools that healthcare organizations employ to lower costs while offering high-quality healthcare services for patients. The outsourcing will assist Burn Care Unit to lower both the variable costs and fixed costs. However, Burn Care Unit still needs to choose the outsourcing vendor with caution because some vendors are not reliable. However, the outsourcing companies such as Aramark, and Sodexo provide outsourcing services such as housekeeping, food services, facility management, and Bio-Med. Roberts, Henderson, Olive, et al. (2013) argue that Aramark and Sodexo specialize in the outsourcing services that include food preparation. The companies also provide the environmental services such as cleaning all staff, patient, and visitor areas, and perform full laundry service. Moreover, Burn Care can also outsource IT services to control and reduce the operating costs, focusing on the core health activities and gaining access to the top class IT services. The suggested IT services that Burn Care Unit can outsource include the electronic medical records and security of the IT Infrastructures. Datamark vendor provides the mail services, scanning/imaging services, document processing, storage and retrieval services for organizations. This vendor assists organizations to lower pricing by leverage the business volume. The organization can also process medical devices efficiently with minimal effort and without incurring the additional capital investments. Despite the benefits that the health care organization stands to derive from outsourcing, the outsourcing option can be risky. Hsiao, Pai, & Chiu, (2009) argue that the outsourcing can fail if not managed effectively. Moreover, the outsourcing contract may fail if not efficiently drawn.

3: "Estimating Potential Cost Savings from each strategy at various Levels of Implementation"

The report estimates the cost saving of each strategy one by one.

Cost Savings by Discontinuing Baylor Plan

According to the Baylor Plan, nurses work for 12-hour shift and nurses who work 24 hours on the weekend get paid for 36 hours, and nurse who work 60 hours weekday get paid for 70 hours. However, the plan costs the organization over $800,000 of nursing payrolls. Thus, if Burn Care Unit eliminates the Baylor Plan, the organization will assume 24-hour costs for nurses who work for 24 hours and 60 hours for nurses who work for 60 hours eliminating the OT eligible at 1.5x. Thus, nursing staff who work two 6 am -- 6 pm shifts at weekend and weekday actually work for 84 hours (7 x12), however, receive the pay of 106 (36 +70) hours. Thus, the nurses receive an extra of 26.19% (106/84 -- 1), above and over their base (regular) pay based on the overtime policy. The annual baseline costs of the hospital based on the regular pay are $3,398,028. However, an implementation of the Baylor Plan increases annual baseline costs to $5,095,094. The organization will save $1,697,066 ($5,095,094 -$3,398,028) if discontinuing with Baylor Plan. However, this option is not cost-effective because nurses will go on strike because of the new policy. Moreover, some nurses may leave their present job. Since this option may provoke strikes among the nursing professional, the report does not support this option.

Cost Savings from Improvements of Information Systems

Burn Care Unit will enjoy costs saving by improving the information systems. The organization will incur $200,000 investment in direct care that will improve nurse time by up 50%. A total of $500,000 will also be required to improve nurses efficient by 50% making the cumulative investment costing $700,000. As being revealed in the table below, Burn Care Unit will record annual one- time savings of $375,800 by improving the information systems with an annual saving of $541,662. As being revealed in the table below, Burn Care Unit will record $2,000,787 from IT and business savings within three years. Appendix 1 reveals a detailed analysis of costs savings from the information systems improvements.

Organization Total

Per PC

IT SAVINGS

One Time

Annual Recurring

3-Year Total

One Time

Annual Recurring

3-Year Total

Software - Clients

300000

205000

915000

60

41

Software - Servers

39800

57710

8

1

12

Hardware

36000

52200

7

1

10

IT Services

0

24000

72000

0

5

14

Power/Electricity Usage

224037

672111

0

45

Other IT Costs

0

11700

0

1

2

Total

375800

468307

1780721

75

94

Business SAVINGS

Travel Expenses

73355

220066

0

15

44

Business Services

0

0

0

0

0

0

Other Business Expenses

0

0

0

0

0

0

Total

0

73355

220066

0

15

44

Total

$375,800

$541,662

$2,000,787

$75

$108

$400

Cost Savings from Outsourcing Strategy

The study performs the cost-benefit analysis of the outsourcing alternative to determine whether the outsourcing alternative is the best strategy to lower the operating costs. A single-year cost analysis of establishing the outsourcing is as follows:

A single-year cost analysis

Costs of Outsourcing Set Up

Cost- Benefit Analysis

Cost Categories

Costs

Cost Categories / Annual Costs of Service

Costs

Costs Avoided by Outsourcing

Vendor's Bid Price

450000

Salaries/Wages

$5,095,094

$3,000,000

Contract Administration

30000

Furniture/Equipment

100000

100000

Transition Costs

Supplies

200000

200000

• Unemployment

2000

Software

20000

20000

compensation

Lease and Facility Rent

100000

100000

Accrued vacation

15000

Communication/Utilities

25000

25000

benefit

Severance pay

15000

Penalties for early lease termination

Revenue from Sale of Unused

Assets

Total

$512,000

Total

$5,504,094

$3,445,000

The summary of the analysis is as follows

In-house costs to be avoided by outsourcing

Total costs of outsourcing

Cost savings from outsourcing

$3,445,000

$512,000

$2,993,000

Cost Savings = $3,445,000 - $512,000 = $2,993,000.

Based on the outcome of the calculation, Burn Care Unit will realize cost savings of $2.99 Million yearly if embark on an outsourcing alternative.

Three-year cost analysis

Cost Categories

Current Annual

Costs of Service

Costs Avoided by Outsourcing

Costs Avoided by Outsourcing

Salaries/Wages

$5,095,094

$3,000,000

$3,000,000

$3,000,000

Furniture/Equipment

100000

100000

100000

100000

Supplies

200000

200000

200000

200000

Software

20000

20000

20000

20000

Lease and Facility Rent

100000

100000

100000

100000

Communication/Utilities

25000

25000

25000

25000

Total

$5,504,094

$3,445,000

$3,445,000

$3,445,000

The NPV (Net present value ) of the costs avoided by embarking the outsourcing alternatives within three years using 15% discount rates is as follows:

Present Value: $7,865,710.53

FV (Future Value)

$11,962,762.50

Total Principle

$10,335,000.00

Total Interest

$1,627,762.50

Moreover, the cost of setting up the outsourcing agreement is reduced year by year. For example, the costs outsourcing with Datamark Inc. are $512,000 in the first year, however, the costs are reduced to $470,000 in the second year and $460,000 in the third year. Analysis of the outsourcing alternative reveals that that Burn Care Unit will derive significant cost savings from the outsourcing alternatives. Despite the benefit that can be derived from the outsourcing strategy, the human resource issues can arise, which can be in conflict with the outsourcing policy. For example, there can be a resistance to outsourcing.

4:Chosen Strategy and Implementation Plan

The study chooses the improvement in the information systems because this is the only viable alternative that will yield cost savings and will not lead to a conflict within the organization. The implementation plan will be carried out within 13 weeks and is revealed as follows:

Implementation Plan

Formation Implementation Team

Project manager, IT manager, physicians, nurses, medical assistants, receptionists, and administrative staff

1 week

Configure the software

The software is EHR software, computerized order entry, and Practice management software

1 weeks

Identification and Installation of hardware

Server, network, laptop, printer,

3 weeks

Transfer data

The following critical data should be transferred in the system: Preferred pharmacy

• Medication list

• Past medical, social and family history

• Immunization history

• Allergies list

• Pregnancy history ( OB/GYN practices)

• Growth chart (for pediatric practices)

• Patient registries

• Recent visit notes

• International radio tracking (cardiology practices)

3 weeks

Room Layout

Put computer in the appropriate places

I week

Initiate training

Staff training

1 week

System Testing

System Testing

• Test Network

• Conducting point-to-point connectivity checks

• Test data flow using transaction generators

1 week

Launch approach

Incremental Approach that allows nurses and other staff to master and gradually learn the system.

2 week

Procedures when hardware is down

Backup file and store copies off-site

Ongoing

Mechanism for learning and improvement

1 week.

Total

13 weeks

Reference

Hillestad, R., James, H. B., Katya, F. et al. (2005). Health Information Technology: Can HIT Lower Costs and Improve Quality?. Santa Monica, CA: RAND Corporation.

Hillestead, R. Bigelow, J.H. Bower, A.G. (2005). Can Electronic Medical Record Systems Transform Health Care? Potential Health Benefits, Savings, and Costs. Health Affairs, 24 (5):1103-1117.

Hsiao, C. Pai, J. & Chiu, H. (2009). The study on the outsourcing of Taiwan's hospitals: a questionnaire survey research. BMC Health Services Research.9:78.

Roberts, J. G. Henderson, J.G. Olive, L.A. et al. (2013). A Review of Outsourcing of Services in Health Care Organizations. Journal of Outsourcing & Organizational Information Management.

Shukla, R.K. (2000). Burn Care Unit. The Electronic Hallway University of Washington's Daniel J. Evans School of Public Affairs.

Appendix 1: Detail Costs Saving for the Information Systems

Direct Cost Savings

% of PCs

One-Time Costs Avoided

Annual Costs Avoided

3-Year Total

Application A

0

20

200000

Application B

0

40

240000

Imaging tools

1

10

0

25000

Encryption tools

0

20

90000

OS virtualization

0

20

60000

Security Utilities

1

20

300000

Total

300000

205000

915000

Total Number of Servers

Quantity

One-Time Costs Avoided

Annual Costs Avoided

3-Year Total

Business Applications

6

52200

Back-Up / Recovery

6

30

OS virtualization

4

30

Security Utilities

4

30

Other

2

75

Total

39800

57710

Quantity

One-Time Costs Avoided

Annual Costs Avoided

3-Year Total

Server Consolidation

4

34800

Virtualization

2

17400

Peripherals

0

0

0

Replacement

0

0

0

Other

0

0

0

Total

36000

52200

Quantity

One-Time Costs Avoided

Annual Costs Avoided

3-Year Total

Consulting Services (Hours)

80

0

36000

Outsourcing (Hours)

80

0

36000

Other

0

0

0

0

Other

0

0

0

0

Other

0

0

0

0

Total

0

24000

72000

PCs

Servers

Ann'l Total

3-Year Total

Average Watts per PC/Server

Average Watts per monitor

(CRT/LCD mix)

60

10

Total

kW-hours per day

3

19

Electricity cost/ kW-hour

0

0

Electricity cost / PC/Server yearly

Number of PCs/Servers

% PCs/Servers impacted by power saving measures

1

1

Average time per day (hours) reduced for impacted PCs/Servers

14

24

% reduction in the power usage

1

1

Total Benefit per PC/Server

32

Total

160965

63072

224037

672111

Quantity

One-Time Costs Avoided

Annual Costs Avoided

3-Year Total

Reduce Bandwidth Costs

10

0

Reduce Heating, Cooling Costs

2

0

Reduce Other Facilities Costs

10

0

0

0

Other

10

0

0

0

Total

0

11700

# of employees impacted

Average number of trips

5

% of trips avoided due to proposed solution

0

Trips avoided

67

Cost of average trip

Total Annual Benefit

73355

3-Year Total

220066

Quantity

One-Time Costs Avoided

Annual Costs Avoided

3-Year Total

Consulting Services (Hours)

0

0

0

Outsourcing

0

0

0

Other

0

0

0

0

Other

0

0

0

0

Total

0

0

0

Quantity

One-Time Costs Avoided

Annual Costs Avoided

3-Year Total

Supply costs

0

0

70

0

Raw Material Costs

0

0

90

0

Inventory carrying costs

0

0

30

0

Operations

0

0

60

0

Other

0

0

60

0

Other

0

0

0

0

Other

0

0

0

0

Other

0

0

0

0

Total

0

0

0

Organization Total

Per PC

One Time

Annual Recurring

3-Year Total

One Time

Software - Clients

300000

205000

915000

60

Software - Servers

39800

57710

8

Hardware

36000

52200

7

IT Services

0

24000

72000

0

Power/Electricity Usage

224037

672111

0

Other IT Costs

0

11700

0

Total

375800

468307

1780721

75

Travel Expenses

73355

220066

0

Business Services

0

0

0

0

Other Business Expenses

0

0

0

0

Total

0

73355

220066

0

Total