Cost Reduction in The OR

by | Sep 3, 2019 | Cost Reduction, Operating Room, Research Reports

This research report was compiled by Lisa Miller.

EXECUTIVE SUMMARY

In June 2019, an Executive Order issued by the White House directed the Department of Health and Human Services (HHS) to issue new proposed regulations.

This regulation requires hospitals:

‘’to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in an easy-to- understand, consumer-friendly, and machine-readable format using consensus-based data standards that will meaningfully inform patients’ decision making and allow patients to compare prices across hospitals services.”¹

This ruling is intended to transform the way in which hospitals interact with their patients. In doing so, it creates a new level of transparency, mandating public disclosure of proprietary rates found in negotiated contracts between payers and health systems.

This mandate, if enacted, has the potential to transform the face of the healthcare market.

While legal challenges are expected, hospitals must be prepared for these possible changes. In a letter to the Office of the National Coordinator dated June 3, 2019, the AHA (American Hospital Association) recommended that “the agency focus its efforts on patient’s out-of-pocket costs to address the goal of price transparency”.

Furthermore, the AHA recommends: “In addition to developing the technology necessary to scale price transparency solutions, we urge the agency to consider how to educate patients to interpret and use the data’’².

Drawing on our front line expertise at VIE Healthcare® Consulting, this report explores the impact of pricing transparency for hospitals, and the urgent need to implement our proven approach to cost reduction, specifically in the OR.

Our approach is multi-faceted: to analyze supply cost data, map it to reimbursement data, and develop a cost-per-case roadmap. We work with clinicians and hospital leadership to design a customized plan for cost savings.

Our strategy includes the vital education, collaboration, and alignment between finance and surgeons. If providers understand the true costs of procedures, and the resulting reimbursement, they can assist both the hospital and their patients in decision making.

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