Innovating Cost Reduction
This article was written by Lisa Miller.
One thing that US healthcare leaders have learned through the pandemic is the importance of cost management through innovation.
A 2019 report found that nearly two-thirds of hospitals are slow to scale innovation and less than half have a mechanism for moving forward in this area, but COVID-19 has forced health systems to review their processes.
Nearly two-thirds of hospitals are slow to scale innovation, but COVID-19 has forced a review of processes. Read more here. Click To Tweet
Every hospital needs a strategic plan for innovation. Innovation can play a key role in improving your hospital’s financial position as the sector continues to evolve and respond to the pandemic.
Two key areas that have challenged healthcare leaders during this time are highlighted below:
It has taken a pandemic for health systems to fully recognize the tremendous value that telehealth offers in delivering patient care, while also contributing to lower costs.
The use of telehealth has expanded rapidly, from around 11 percent of US consumers in 2019 to 46 percent during the pandemic and early indications suggest this change could be permanent. One study predicts that $250 billion of current American healthcare spend could be virtualized, compared to $3 billion before COVID-19.
A further report suggests that telehealth has been the biggest challenge for healthcare executives during the pandemic.
VIE Healthcare partners with hospitals to develop a three to five year plan for telemedicine and telehealth implementation and proactively plan for future healthcare plans.
Embracing real-time analytics
In addition to telehealth, innovation in real-time data analytics has been a major challenge for healthcare executives in the past six months.
Today, there is a greater need for hospitals to comprehensively understand and analyze the cost data within their business. One of the six key questions to identify cost savings opportunities in my previous blog related to your hospital’s use of multiple data sources to ensure accuracy.
- Implementing spend data analytics by measuring small and then expanding your focus.
- Using ‘’real-time’’ data. Do not rely on data which is 12 months old. Our patented technology Invoice ROI™ identifies hidden cost savings in your purchased services spend on a monthly basis and in real-time. This process eliminates reliance on manual systems and leverages the power of data analytics to improve patient care. In some cases, we have found that up to 30% of hospital purchased services spend is off contract or does not match agreed contract pricing. The COVID-19 cost impact, where costs are being charged for services which have not been carried out, has exacerbated this issue.
Ensuring a cost value in innovation
As financial pressures remain on hospitals, how do you determine if a cost innovation is worth implementing?
Hospitals are urgently looking for consistent and guaranteed cost savings. While there absolutely has to be a cost value, it isn’t only about numbers, but also how innovation will impact your hospital and transform patient care.
Furthermore, if your hospital is implementing cost innovations, there must be accountability. Someone has to be committed to ensuring those cost savings are achieved.
The concept of a ‘’centralized innovation budget” dedicated to digital innovation has been recommended for long-term success, with the following additional advice suggested for funding:
- Talk benefits, not savings.
- Start small. With spend data analytics, for instance, begin with the ‘’small data’’.
- Make time for innovation.
- Organize for innovation. Be open to change.
- Explore novel funding sources – and ensure your hospital has claimed all the funding it is entitled to under the CARES Act.
As the industry finally begins to embrace innovation, cost management will change. Partnering with a healthcare cost reduction specialist with a track record in innovation helps your hospital to stay on track.
Innovations emerge from both inside and outside of the healthcare market. At VIE Healthcare, we are committed to adopting best practice from other industry sectors and applying it to healthcare.
Schedule a call with Lisa Miller to implement cost innovation in your hospital.