In the troubled U.S. economy, savvy hospital administrators are balancing their budgets through non-salaried cost reductions, avoiding or reducing the size of layoffs, in order to safeguard the organization’s ability to provide quality patient care.

According to an October 2008 American Hospital Association survey, 59 percent of hospitals are reducing administrative costs, making this the top strategy for surviving the recession.

Goods and services are a hospital’s second largest costs, so focusing on supply chain management – especially physician preference items, purchased services, pharmacy and capital improvement projects that are already in progress or planned – makes a lot of sense when it comes to reducing costs.