This article was written by Lisa Miller.
Every hospital needs a cost savings roadmap for success aligned to a bold vision for their organization. At VIE Healthcare, we define eight clear steps for that roadmap, summarized below. As you consider your vision, my suggestion to you is to imagine having this discussion in two years’ time as you reflect on progress. Ask yourself:
- What achievements and changes would have had to happen in your hospital for you to be satisfied with your cost savings progress?
- What risks do you need to eliminate?
- What opportunities need to be captured?
- What strengths need to be maximized?
Create a plan: Your plan must include details for implementing each step, commitment from your leadership team, an accountability structure to measure performance, and sufficient resources to enable your vision to become reality. That must include an effective cost management system to identify cost savings in real-time.
Commitment from your leadership team: A cost improvement culture is essential to create a high performing healthcare organization, which requires CEO accountability and a culture shift towards transparency. We recommend that cost improvement is the responsibility of a dedicated board member such as a VP of Cost Strategy for example, who reports directly to the CEO.
A cost improvement culture is essential to create a high performing healthcare organization. Read why this is important for your hospital. Click To Tweet
Accountability structure to measure performance: Without accountability and regular monthly measurement of your costs, you have no idea if your strategy is working. Cost management is critical to your organization. Data analytics (see below) is key to gaining accurate insights into where you are spending your dollars.
Allocation of sufficient resources: Driving margin improvement takes time and resources to enable your vision to become reality. The tendency to operate in silos increases the risk of different departments running contracts at differing prices with the same vendor, as well as fluctuations in prices paid. We recommend that cost savings initiatives are always carried out in collaboration with a cross functional team, encompassing staff working in supply chain, performance improvement, department leaders and nursing. Ideally, you want a small agile but engaged team. If resources aren’t available at this time, partnering with a specialist healthcare consulting provider can help.
Data analysis: Without proper spend data analytics, hospitals cannot translate their data into cost savings or actionable insights. What can be measured can be improved. Bad or misinterpreted data is worse than no data at all. Only an estimated 12% of healthcare organizations effectively use data analytics in their cost savings strategy.
Physician engagement: Physician and clinical engagement are the major drivers of utilization and cost for your hospital. Developing strong relationships between your organization and its physicians creates a mutual understanding and commitment to your values and long-term vision. Physician engagement enhances efficiency and contributes to better productivity, enhanced patient care and higher levels of patient satisfaction. Increasing physician cost awareness also drives better financial performance and saves your hospital money. Including surgeons in cost initiatives can play a significant role in reducing costs in the long-term.
Internal skill building for sustainability: Our aim at VIE Healthcare is to empower your staff in areas of cost reduction. Our comprehensive vendor negotiation training, for example, helps your organization to develop invaluable negotiation skills and empowers your employees to hold your vendors accountable. These are key skills to achieve a cost savings strategy for your hospital.
Effective cost management for cost savings in real-time: Our patented technology, Invoice ROI™ delivers guaranteed margin improvement in your purchased services spend and identifies cost saving opportunities for your hospital in real-time on a monthly basis. Our process uncovers the cost savings opportunities by carrying out a line item analysis of your purchased services invoices. Our technology also eliminates your manual process so your team can work on other vital initiatives. Strategy is a challenge for healthcare leaders. Our team of experts at VIE Healthcare will help you to determine the most effective way to approach your bold vision and to create a Cost Savings Roadmap for your hospital.
Schedule a call with Lisa Miller to implement a cost savings roadmap for your hospital.