How LOGEX Costing helps Kainuun sote to achieve transparency of their costs and cost structure
About the client
Kainuu Social Welfare and Health Care Joint Authority, or Kainuun sote, provides social- and healthcare for seven municipalities. Kainuu is the first region in Finland to integrate primary-, secondary- and social care. This type of integration is the basis for sweeping reforms in Finnish Health and Social services, resulting in 21 new wellbeing services counties in Finland in 2023.
Kainuun sote employs about 3400 people and reports operating costs totalling nearly 380 million euros. So far, LOGEX Costing has supported Kainuun sote in achieving transparency of their costs and cost structure, mainly in special care. Our work there has laid the perfect foundation for the future expansion of our collaboration.
The challenge
Kainuun sote wanted to better understand the cost associated with catering and specifically per catered item. Doing so would help make better decisions around what to produce in-house and what to have catered for by external providers. Compared to the cost of treatments in special care, catering might not seem the natural starting point for meaningful efficiencies or cost savings. However, support functions can often respond quicker to the need for efficiencies than other departments. Furthermore, opportunities to improve costs often highlight actionable operational changes that are easier to implement than changing treatment or physician behaviours. After all, achieving efficiencies by changing part of the catering supply chain is less controversial than asking a surgeon to change their working methods when in theatre.
That is not to say that medical leaders were not involved in the process. To get the transparency that Kainuun sote was after, they also described the cost of their care pathways.
Cost information is important for opening up discussions about care paths and processes with the medical leaders and hospital high-ups. Accurate cost information is crucial when deciding, for example, the frequency of providing real breast milk to newborns. If you suggest reducing the frequency, you might run into strong resistance based on feelings, so you need data to back up the suggestions for decision making.
Minna Haverinen, Service manager of Kainuun’s catering services.
To increase the impact of their work, Kainuun sote also aimed to benchmark catering costs with other hospital regions. Although the available data did not allow them to do so, the Kainuun sote approach can now be used as a blueprint for other units. Many of them are LOGEX clients that have not done calculations for catering yet, we are set to use the expertise and knowledge gained to build to scale.
The solution
With the implementation of LOGEX Costing, Kainuun sote can now calculate new areas of functions and determine calculations and activities. The biggest benefit has been when multi-professional teams, together with LOGEX experts, have sat together in workshops to look at the figures and trace the origins of costs.
Transparency and traceability were seen as really important features in Costing. “We need the ones who know the solution, we need those who know the calculations and the subject experts to come together to evaluate the findings,” according to Minna. According to Taneli Pikkarainen, who works as a financial planner and is our main contact, LOGEX Costing is a good solution when expanding to other units, as it is so easy to manoeuvre. Both Minna and Taneli are clear: projects like these would not be possible by using only spreadsheets.
LOGEX Costing provides them with a tool where they can easily combine data from different legacy systems, like SAP and Jamix, which is an application for foodservice operators, for calculating product-specific cost of production.
Financial Control
Our Financial Control suite enables you to gain mastery over patient volumes, resources and finances for the entire organisation, leading to better financial performance—with the numbers to prove it.
We cover the full spectrum of financial and operational processes, from costing and budgeting to forecasting and contracting.
Our activity-based costing model empowers you to:
Simplify cost calculations
Make cost calculations for healthcare providers that are easy to understand, apply, and optimise.
Optimise resource allocation
Allocate resources and costs to patients, care activities and episodes.
Improve through benchmarking
Benchmark unit costs with national and international peers to identify areas for improvement.
Meet regulatory standards
Deliver information to national regulators automatically and in full compliance with National Cost Collection requirements.
Our activity-based budgeting model makes it possible to:
Build and benchmark budgets
Seamlessly link volumes, resources and finances in one budget.
Anticipate and respond to future demand
Match the deployment of resources and manpower to the future demand for care.
Zero in on areas for improvement
Determine how portfolio choices impact operations, and spot areas for improvement.
Involve physicians and managers in budgeting
Bottom-up budgeting functionality facilitates collaboration with non-financial stakeholders.
Our forecasting model enables you to:
Forecast and monitor volume, revenue and cost
Stay on top of expected vs. realised volumes, revenues and costs on a near real-time basis.
Analyse and factor risk into payer contracts
Automate value-at-risk calculations for all contractual agreements with commissioners.
Leverage machine learning algorithms
Build and maintain reliable, easy-to-access forecasts based on machine learning algorithms.
Produce timely, compliant reports with ease
Deliver periodic financial results that are fully compliant with national regulations.
The impact
The most tangible results include a new price list for the catering function, based on vastly improved insight into costs associated with catering, and plans to optimise the catering delivery using accurate costing information. However, the biggest impact of this project might well be the fact that there is now a queue outside Taneli Pikkarainen´s door with units that are eager to have their cost correctly calculated.