This article was written by Lisa Miller.
As healthcare leaders direct their focus to 2021, implementing high performing strategies for cost savings has to be a priority.
At the time of writing, 32 US hospitals have filed for bankruptcy in 2020. Reimbursement challenges, falling patient volumes and financial challenges arising from the pandemic are likely to push that number even higher in the near future.
Many healthcare organizations lack the capabilities to respond effectively to such disruption, yet financial recovery and long-term profitability demands a bold and robust approach to cost management.Long-term profitability demands a bold and robust approach to cost management. Discover our 10 high performing strategies for hospital cost savings. Click To Tweet
Our newly published report details ten sustainable, high performing strategies for cost savings to empower your hospital to deliver margin improvement across all areas of your hospital.
These strategies include:
Strategy 1: Zero Based Budgeting (ZBB)
One of the principles which we operate on at VIE Healthcare® is applying best practices from other sectors on healthcare. Zero based budgeting (ZBB) is a system widely adopted elsewhere but rarely seen in healthcare.
ZBB is defined by Investopedia as “…a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a “zero base,” and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one’’.
This approach enables a hospital to review its budgeting process from a different perspective, rather than an annual or monthly basis.
Our process: Collaborating with each department leader, VIE Healthcare® analyzes the line item cost and validates their need.
Strategy 2: Clinical Utilization and Value Analysis
High performing hospitals combine data analytics, collaborative clinician engagement and subject matter expertise to deliver better patient care.
At VIE Healthcare®, we work with each department leader and supply chain to perform utilization reviews by physician and identify areas of standardization, overuse and product changes.
Our research report highlights five key questions to ask regarding clinical products (highlighted below) and a further five related to clinical processes:
- What does the product cost?
- Are there similar or identical products that cost less?
- How will the product affect patient care?
- Are there any community related concerns?
- Are there any major environmental concerns?
Innovation in the patient discharge process is also essential for hospitals to avoid or minimize hospital readmissions. Today, one in six patients discharged from a US hospital is admitted within 30 days. That has a serious impact on your ability to implement effective cost savings strategies.
Strategy 3: Pricing – Is Your Organization Paying The Right Price?
With so many market changes in pricing, products, and agreement structures, every health system must continuously review their pricing for market competitiveness.
Our process: As the third mission critical component in managing outsourced services, VIE Healthcare® collaborates with department leaders and supply chain to benchmark all supply and service spend for best in class pricing. We will support the strategy of obtaining new pricing and also offer advice and support for vendor negotiations.
Strategy 4: Supply Chain
The need for supply chain excellence and an efficient and cost effective supply chain for every hospital cannot be understated.
Reliance on imports, a ‘’just-in-time’’ inventory and squeezed financial margins, however, have resulted in the opposite. The 2020 COVID-19 pandemic, while not the root cause, has also exposed the full extent of the vulnerabilities in the US supply chain.
At VIE Healthcare®, we take a deep dive into your supply chain and provide supply chain analytics to identify ways to enhance care quality. We also offer comprehensive support for your hospital to analyze the GPO marketplace.
Strategy 5: Cost Awareness
To maximize cost savings in every area of your hospital, physicians and surgeons must be made aware of the costs of supplies and implants utilized in their cases. While most are eager to understand the price impact of their decisions, the challenge for hospitals lies in how they obtain that cost data. Closer collaboration will help to resolve this issue.
Our process: We recommend a new framework to provide surgeons in the OR, and physicians within the hospital, comprehensive details related to the costs associated with patient care, in real-time. VIE Healthcare® will support a new approach of cost transparency towards surgeons and physicians with a real-time cost feedback system. We also recommend delivering an organizational cost awareness program to all employees.
We also optimize cost management with our unique system, Project CROS – Costs, Reimbursement, Outcomes and Social Determinants of Health.
Read more about these five high performing strategies for cost savings, together with five more proven strategies to create a sustainable cost management strategy for 2021.
Download our research report 10 High Performing Strategies For Cost Savings.
Schedule a call with Lisa Miller to deliver high performing strategies for cost savings across your health system.