You Can’t Manage What You Can’t Measure
According to the 2017 HealthLeaders Media Cost and Revenue Strategies Survey, healthcare executives who embrace determining the true cost of providing care at their organizations find themselves in a better position to offer transparency, which they see as a competitive differentiator.
One of the largest obstacles to revenue growth is our industry’s inability to determine the true cost of care delivery. The HealthLeaders’ survey bears this out. Respondents say that the biggest barrier to achieving sustainable cost reductions is the lack of data on the true cost of care (58%).
This lack of data/insight is something we’ve seen in our own work with organizations on the intra-company logistics front. We get it. The healthcare finance system is not designed to calculate transportation costs. The result: most organizations don’t know the true cost of transporting items throughout their system. Lacking that measurement means they have no way of knowing how to manage those costs or improve their operations.
Other survey responses about obstacles to revenue growth were fairly evenly spread across factors: insufficient integration with care partners (45%); lack of technology in place to achieve goals (34%); regulatory compliance (33%). This grouping of “barriers” is an indication that achieving sustainable cost reductions touches on all aspects of provider organizations.
The survey also found that 49% of respondents say that the transition from fee-for-service to value-based care has either significantly improved or somewhat improved their cost containment efforts. And while healthcare reform has been a driver of positive change, the progress is slower than most would prefer. Driving down costs through purchasing and supply chain efficiencies and maximizing revenue collection through disciplined revenue cycle practices remain effective strategies, according to the survey report.
Chad A. Eckes, MBA, executive vice president of corporate services and CFO at Wake Forest Baptist Medical Center, says, “The biggest thing is getting people to standardize their approach to doing things and realize that cost management and reducing some of the waste is as important as the rest of their job.”