Keys to Controlling Healthcare Delivery Costs in 2015
Between diminishing reimbursements and the transition to value-based care, healthcare providers face ever-increasing pressure to reduce healthcare delivery costs. In this environment it’s become critical that operations be managed more efficiently in order to protect margins, on top of adhering to their mission of delivering quality care that supports optimal health outcomes.
Any dollar spent on healthcare administration is a dollar not spent on research, or funds that could be supporting the care of a patient or a larger volume of patients. The healthcare industry was previously living in an era of unlimited spending, but with healthcare costs at 18-19 percent of GDP, frivolous spending has hit its limit.
In order for healthcare organizations to achieve greater efficiency and improved outcomes, they should consider the following five steps:
- Centralize the supply chain. Supply chain processes enable administrators to identify and eliminate inefficiencies, so it’s important to have an end-to-end view of an organization’s entire supply chain. By combining warehouse management, labor management, transportation management and demand planning into a unified solution with a common user interface, healthcare administrators can analyze costs comprehensively and unite their entire supply chain into an integrated, streamlined business process.
- Make sure labor is effective, efficient. Labor is the biggest expense in the delivery of care, with 60 percent of the cost of care being people. Consequently, effective workforce management is critical to an organization’s success. Part of effective workforce management is rapid onboarding, because after all, the faster your clinical team is up to speed, the quicker they can care for patients. The reality? In a typical onboarding process, it can take up to 45 days for an employee to reach full productivity, according to a study by the University of Michigan and the U.S. Department of Labor. With that in mind, one question healthcare administration should consistently ask is, “What is the relationship between staffing and clinical outcomes, medical errors, or wait times for care?” Focus on managing labor costs and compliance through advanced planning and scheduling, saving time by automating key workforce management processes and analyzing workforce data in order to anticipate workforce demands and schedule the appropriate amount of nursing coverage. Not only will this improve efficiency, but it will also improve the satisfaction of patients and employees.
- Get the back office in order. Improve the management of back-office financial, HR and supply chain systems by considering a way to merge them for greater effectiveness. An integrated suite of agile, scalable solutions will allow administrators to access, share and analyze data from multiple systems and platforms. This will help in developing easy-to-use, highly intuitive views of the most relevant information and action items.
- Make sure key metrics are tracked, accountable. Given the exploding amount of data available to healthcare organizations, healthcare administrators must develop the capacity to track key quality and performance metrics continuously, sharing information across a patient’s continuum of care and constantly working to improve interoperability and information exchange.
- Staff with the patient in mind. With patients requiring different levels of care at different times, administrators need to determine appropriate nurse workload and staffing in order to achieve optimal workforce efficiencies. To reduce labor and operational costs while improving outcomes, providers should implement a patient-centric approach that treats each patient uniquely and uses empirical, evidence based data to develop detailed knowledge of every patient’s care needs.
The Holy Grail to achieving optimal value-based care is to find less expensive ways to provide optimal care in a lower cost environment that is also more accessible. Providers who take decisive steps to streamline management, information and supply-chain processes will be better positioned to achieve consistent, end-to-end management of costs, while also improving patient outcomes.
Steve Fanning has over 15 years of experience in enterprise software, healthcare information technology, and analytics. During his career he has worked with PDI International, Lawson Software and now Infor. Also an entrepreneur, he founded Lingo Technologies in 2005, delivering cloud-based solutions for agile growth organizations.