Key Opportunities for Healthcare Cost Savings

The financial challenges facing the healthcare industry today are staggering and continues to be a top issue for healthcare CEOs. Healthcare is experiencing challenging clinician shortages. Hospitals and provider groups have been continuously operating in the red due to a competitive labor market requiring expensive labor contracts. Patient volume has increased, partly due to patients choosing new modes of care – a new care shift that demands organizations to improve productivity and spending. And the already high expenses mixed with rising inflation and declining operating margins leaves the healthcare industry in a financial crisis.

So, what can healthcare leaders do right now to alleviate these challenges and realize cost savings?

Knowing that many organizations will be faced with cost control measures and budget cuts, an investment in technology can greatly assist in the identification of opportunities and realization of healthcare cost savings in both the short and long-term. This may sound counterintuitive, but simply cutting budgets or staffing without process and technology to fill the gaps is a quick recipe for poor quality, staff and patient dissatisfaction, and decreased viability. To start, identify what top key areas of opportunity you should invest in, based on the expectations of return and outcomes of cost savings that best meet your needs.

Healthcare Cost Saving Opportunities

1. Decommission Systems

It’s not uncommon for healthcare organizations to need access to legacy applications when implementing new systems, such as an electronic health record (EHR).  If any of these systems are either still in use for more than a year post-replacement, or even just sitting idle, it’s time to decommission these systems and stop paying for maintenance and licensing.  It’s highly unlikely that useful clinical data is still needed after a year – if information is needed, there are processes that can be implemented to reduce access to requests from health information management (HIM) rather than broadly deploy and license the applications.  Some systems have legal requirements for data retention and will require archiving while others can simply be decommissioned. 

The benefits gained through this effort include decreased licensing and maintenance costs, decreased application environment complexity, and decreased cybersecurity risk.  

2. EHR & ERP Top of Use

It’s important to leverage the (EHR) and enterprise resource planning (ERP) to their fullest extent within the enterprise – unused capabilities within the organizational scope of needs are unmet opportunities for efficiency, growth, and cost savings. At the same time, no organization should pay for functionality it doesn’t need or try to find a use for technology just because it’s licensed. Instead, you should take time to trim unnecessary functionality from your licensure, use what you need to it’s greatest extent, and carve out what isn’t needed.

With the maturity of the newest EHR versions by Epic, Cerner, and Meditech, there is often little reason to use 3rd party solutions where the EHR has embedded functionality.  Similar to having staff work at the top of licensure to drive cost efficiencies, leveraging all the capability of your enterprise EHR can lessen the complexity of your application portfolio, decrease 3rd party licensing costs, and simplify both application deployment and integration needs. There will be the occasion where a unique function of a 3rd party solution is necessary, but these decisions should be revisited on a recurrent basis to identify the right time to move to an embedded solution. 

ERP systems can be just as complex to operationalize as an EHR.  Ensuring the different systems are set up to leverage the power of a modern ERP is key to both efficiency and visibility to operational opportunities in finance, human capital management, and supply chains.

3. Retool PMO & Digital

Health systems seldom lack projects in their project management office (PMO) funnel. Organizations without objective and formal project approval processes may be driven by politics, the loudest voice, dilemma-of-the-day, or a first-in first-out approval methodology.  None of these methods look at value, expected outcomes, or strategic alignment.  Implementing a project approval process that strongly weights organizational value in the form of cost savings and revenue generation should be a priority when looking to manage spend.  

Similarly, an organization’s digital transformation strategy should be documented, aligned with value and strategic goals, and ultimately shared. Because digital programs tend to be many smaller projects coming together for a specific vision for consumer engagement and ease of use, sequencing and timelines are important.  A conscious strategy starting with value, looking at dependencies, and sequencing to minimize throwaway work or non-value added work should be first priority within the governance for any digital program.  

Once an organization is aligned on strategy, the human elements of a digital program need to be considered to drive success.  Rarely can technology be implemented for technology’s sake where people seek it out to embed it into their work processes.  Thoughtful human-centered design is an often-missed key to success.  Spending time creating consumer personas, journey mapping, and tying that all into the consumer experience ensures the technology will be successfully, openly, and consistently used for the long term.  

Healthcare IT programs typically operate using waterfall methodologies for projects.  Todays need to match the speed of digital and innovation in a PMO drives a need to adopt more Agile project management approaches.  With the right project controls and agile methodologies, cultural change can be successful within healthcare IT to speed development, foster more collaboration, and keep up with market trends.

4. Drive Operational Efficiency

Lack of operational efficiency leads to increases in labor costs, decreases in opportunity for revenue generation, and contributes to burnout through requiring staff to complete mundane or non-value adding work.  Team members feel fulfilled when performing engaging work and feeling valued for that work.  Below are four opportunities to fight burnout, disengagement, and improve productivity.

Business Accountability in Clinical Areas

One thing that for-profit hospitals tend to do better than the not-for-profits is having front line managers on the clinical side of the house understand how their departments both generate revenue and incur expenses.  Either building or revising management reports to visualize the areas of expense and revenue can provide a much-needed transparency to the managerial layer in understanding their business in addition to patient care.  Creating accountability for these metrics also drives the continued application and attention to them. Some gains may be small, such as savings on low-cost supplies, but larger opportunities can be found where costs are missed completely or individuals with a closer eye on operations can identify workflow changes that can make a big difference to the organization.

Automation

Both a driver of dissatisfaction and inefficiency are the repeatable tasks pushed to individuals that could be automated.  Robotic Process Automation (RPA) is used in healthcare, but often as an embedded tool in specific software solutions.  There are now purpose-built RPA toolsets to assist in automation of tasks outside of those specific embedded solutions.  Take time to survey and interview progressing leaders and informal front-line leaders to identify mundane and repetitive tasks that staff perform.  Journey mapping internal resources work processes will also identify opportunities for automation. Building automation around these tasks is typically low effort with high value.  Gains can be made with productivity as well as staff job satisfaction.

Nursing Efficiency & Teleservices

The high cost of travel nursing needed to fill gaps in nursing schedules has crippled the personnel budgets at many health systems.  To help combat this, ensure nursing staff have effective training and uses efficient workflows that sets the groundwork for more advanced initiatives.  Post-pandemic training needs to be retooled to become short and targeted. Ideally, learning provides necessary training in the form of process-specific micro-learnings. Classroom instructor-led training can often be replaced with virtual instructor-led training (VILT) to gain back inefficiencies of travel time, technical debt, physical space leases, power, and HVAC and maintenance. There are a number of systems that can be used to improve department-to-department communication regarding staffing needs and overages.  Instead of calling off a staff nurse in one department and then bringing in a travel nurse in another, intradepartmental communication to share staff where skills align can decrease the reliance on external staff.  Newly popular is using technology as a nurse extender. TeleSitting is the largest use-case, but telenursing has other potentials to give back time to the bedside nurse with patient education, admissions, and discharges.

Physician Efficiency

Many communities have severe shortages of both primary care and specialty physicians and the patient demands can’t be met with the available resources within expected time periods.  Physician burnout compounds this problem.  We need our physicians to be working efficiently as possible and be given back time to spend with their patients to engage, build trust, and have access to the necessary data in real time to diagnose and treat patients.  Major EHR vendors have physician efficiency scorecards and reports that can be leveraged to identify workflows that need to be redesigned, physicians or groups needing additional training, or opportunities to personalize for improved throughput.  Evaluation of the data gathered, as well as input from physician’s themselves, can identify if issues are workflow related or if training or personalization is needed.

5. Pulse Project Needs

Often the default answer to projects that do not have available staffing, whether approved or not, is to delay or deny the projects from moving forward.  A shift in mindset can assist in moving projects forward rather than causing large backlogs of work, sacrificing maintenance or upkeep for new projects, or not meeting the organization’s strategic goals.  First is to stop saying “no” to projects but saying “yes, if”. 

If project resources necessary to staff and execute a project are not available internally, answering “yes, if the project budget can support the contracted resources to complete the work” can present a path forward.  Additionally, experienced contracted help can add lessons learned as well as project accelerators to improve the project’s success. Choosing one or two key partners that can understand your organization, fit with your culture, and quickly identify resources is a solid strategy.