Fast forward to today’s healthcare climate, and you’ll find that hospitals are now paid a certain amount (by the insurer, insured, or government) for each defined diagnosis-related group (DRG). It is then up to the hospital to determine how to spend that fee, keeping in mind that the desired outcome is improving the patient’s health status. This payment method began with government programs such as Medicare but has now expanded into the private insurance market.
With this in mind, there are a number of ways hospitals can save money today, ranging from proper resource utilization to strategic organization. We’ll address four of those hospital cost reduction ideas below.
This is not a reduction in labor but a close examination of how labor is used in different situations. For example, use nurse practitioners or physician assistants (physician extenders) instead of physicians in urgent care clinics. Extenders can perform services at a much lower cost in situations where an MD is not warranted—for example, tending to patients who have minor healthcare issues like a cold. In medical research, laboratory assistants can be used to prepare specimen and manage quality control functions, allowing the more expensive technologists to focus on evaluating the data and ensuring quality results.
Doing repetitive, duplicate, or daily laboratory or radiology testing can be very costly. To cut back on these costs, consider ordering multiple-day orders at a single session.
Furthermore, examine your hospital’s use of “convenience testing”—i.e., performing a test or procedure during a hospital stay rather than in an outpatient setting simply because the patient is there. This can increase costs related to inpatient care (supplies, room, support staff, and scheduling delays).
To find opportunities for savings here, you need an effective tracking system. Be sure that all tests given can be seen by the physicians or extenders responsible for treatment and be sure you can track why a test is given (as sometimes an inexpensive or effective convenience test is warranted).
Improving the quality of processes that lead to issues like catheter-associated urinary tract infections (CAUTI) and central-line-associated bloodstream infections (CLABSI) is not only critical for patient health and safety—it’s also a hospital cost reduction strategy. Additionally, improving the identification and rapid treatment of sepsis and reducing readmissions for such issues are critical for cost saving. These initiatives are tied to government reimbursements from federal programs. Better quality measures in this area will result in higher reimbursements.
To successfully achieve these objectives and others, you need a unified strategy in place. Creating a Balanced Scorecard strategy map is one of the best ways to achieve that. It allows you to communicate your organizational goals and engage your team in a clear way.