Long-Term Cost Saving Opportunities in Healthcare

Having experienced financial challenges for several years, many healthcare organizations are struggling to find ways to reduce costs while prioritizing the experiences of their patients. Health systems are operating in the red, challenging clinician shortages are contending with increased patient volume, and rising inflation is still combatting with the ever-changing pandemic landscape. This stressful fiscal situation has left health systems increasingly focused on discovering critical cost saving opportunities.

It’s more important than ever for health systems to not only discover what cost saving opportunities can be considered right now, but to also find cost saving opportunities that can reduce expenses and maintain financial stability long-term. By identifying and pursuing these sustainable opportunities – such as application rationalization, managed services, and business resilience – healthcare organizations can continue to provide high-quality care and experiences to their patients.

Long-Term Cost Saving Opportunities

1. Deeper Application Rationalization

Control of the application portfolio is the goal for long-term efficiency on application licensing and maintenance spending. Apart from personnel, this is the highest cost category for an IT department. Decommissioning the low-hanging fruit applications, or using your electronic health record (EHR) and enterprise resource planning (ERP) efficiently and to their maximum capabilities, are the first steps towards this goal. Going deeper into application rationalization requires more time and effort, but there undoubtedly exists cost saving opportunities for any healthcare organization. This is especially true for those that have undergone any merger or acquisition activity.

The first step is to gain a good understanding of your entire application portfolio. Often organizations believe they have a good handle on this, but they admittedly don’t apply the diligence needed for continued maintenance of application documentation. Beyond having IT contracts and application inventory documents, performing network scans and interviewing key operational and IT leaders can true up this inventory. Identification of key functionality and uses for the applications, as well as their capabilities, requires industry knowledge and experience to look for opportunities to consolidate instances, replace applications, expand application usage, and identify pockets of shadow IT outside of the department.

The key to completing application rationalization is making it a focused initiative instead of a one-time project. Identified opportunities should be road mapped and scoped for execution with KPIs tied to cost reductions that are measured on a semiannual basis. As new applications are added to the portfolio, proactive processes need to be implemented to prevent unnecessary growth of the application portfolio. Currently implemented and licensed software must also be used at its highest potential.

2. Managed Services

The largest expense for IT is typically the staff. Efforts such as robotic process automation (RPA) and pulse contracted staffing for project needs beyond internal capacity can optimize internal staffing levels. But what if you need to do more? 

Outsourcing used to be an unpleasant concept. This is because outsourcing in the 90’s was simply about saving dollars at the expense of quality. Today, outsourcing can still be about cost savings, but it’s also about risk, service, and accountability. Using managed services with a partner that understands healthcare is critical to success. The right partner in managed services can flatten the cost curve as well as meet KPIs and service levels better than internal teams.

Consider the following capabilities for a managed support desk:

• Better access to hospitality and application training (provides a growth path for staff)
• Business accountability to service metrics and KPIs
• Greater access to advanced tech, springing your organization forward by years in:
  • Recording and collaboration tools (listening, whispering, and call transfer)
  • Real-time and retrospective analytics
  • Access to bots, chat tools, and real-time sentiment monitoring

The managed services partner also takes on the risk for performance, maintenance of needed technology, and staffing (including the onboarding of replacement resources).  Additional managed services in healthcare IT, with similar reductions in cost and transfer of risk, include services for:

• Application Issue Management
• Upgrade Management
• Clinical Desktop Support

All of these services have the ability to discover resources across the national market to build knowledgeable and experienced teams.

3. Business Resilience

With a quick look at the headlines, one can understand both the direct and indirect business and health impact costs caused by downtimes or cyber-attacks. Where redundancy and backups used to be enough, we must now turn to more proactive alerting of risks and prevention of downtimes. 

Resilience

Resilience is more than just the ability to recover from a failure or cutover to a redundant system. It’s about early warnings, predictions, and other actions to prevent or fight off degradation or interruptions in technology services.  Strategies that can be taken to build resiliency include:

• Observability: Using data from IT systems and applications to inform both real-time and predictive analytics in necessary scaling, alerting, failure risks, and integrated or cooperative needs across sytems.
  
• Auto-Remediation: An IT systems ability to respond to observability data in order to avoid issues before the users are affected.
  
• Site Reliability Engineering (SRE): Ensuring that service level metrics are in place and are actively measuring, risks have mitigation plans, what can be automated is automated, proactive observability is implemented, and a mature development lifecycle is in place.
  
• Testing (Including Artificial Intelligence and Chaos Engineering): There are a number of emerging providers of artificial intelligence (AI) testing. The premise is that AI and machine learning (ML) are better at pattern recognition and anomaly identification than humans. Incorporating chaos engineering, also known as reverse testing, is testing that tries to break the systems being testes through false scenarios, bad data, or malicious activity. It can be easy to build IT or software systems that work when the correct data is presented or steps are followed, but chaos engineering answers the “what if” scenarios and provides a robustness for testing. This adds the opportunity to build systems that can recognize and deal with scenarios that don’t follow the intended flows.

Cloud Strategy

The cloud provides several opportunities to enhance resilience. Scalability and agility are the new normal in healthcare, and that extends to IT. Organizations need a technology stack that grows when demand increases and shrinks again when demand falls off. The classic approach of building technology capacity to accommodate maximum utilization 100% of the time requires investments in infrastructure and talent that don’t make sense if we’re looking to optimize spend. While some applications in healthcare still aren’t architected to maximize this scalability, we’re seeing evolution in that direction and healthcare organizations need to continue to pressure application vendors to accelerate these efforts.

Another area of opportunity is outside of the classic compute and storage infrastructure plays in the cloud. Cloud vendors today offer a wealth of non-infrastructure services, ranging from contact center capabilities to advanced analytics, that organizations can consume on demand and based on their consumption model. Consider a scheduling call center that may see peak demand during flu season, while other times the volume drops off. With on demand contact center capabilities, the costs of things, like telephony and chat bots, can flex with the demand, allowing expenses to somewhat track to revenue.

One other consideration with the cloud is the economic shift. Healthcare’s acquisition of infrastructure and applications has historically been very capital intensive, demanding large amounts of cash up front with a somewhat indirect return on investment (ROI). Moving to a cloud model allows organizations to free up that capital for investments with a more direct ROI, such as investing in new diagnostic centers or surgery suites. This shift from capital to operational spend is something that requires conversation with the financial stakeholders in the organization and discussions should include the value of cash on hand to help offset the impact to direct operational expenses.

Every organization should have a cloud strategy, but this should not be a random act of technology or an overnight move. Instead, progressively integrate the scalable and flexible capabilities of the cloud into your tech stack. Organizations need a roadmap to follow and should begin with contracting that goes through security and connectivity before any cloud services can be connected, trialed, or implemented. Cost management is another important factor in a cloud roadmap. As convenient as it is to spin up resources in the cloud, it’s just as easy to spin up too many or forget they’re spun up. This results in an end of month invoice surprise.

Advanced Cybersecurity

Having a strong cybersecurity posture is a must in healthcare, and it’s rapidly moving to “zero trust” models. These models essentially say “never trust and always verify” users and devices that want to access your network and data. These zero trust approaches are the best way to secure networks in our modern world.

Zero trust also has ROI benefits.  According to Cybertalk.org, zero trust has the potential to:

• Reduce data breach cost by $1.76 million
• Free up nearly 40 person-hours per week
• Make it 2x more likely to avoid critical outages due to attacks