Healthcare Leaders Look to Manage Costs and Reduce Variation

Our healthcare industry finds itself in a period of uncertainty. No one knows what the future of payment/insurance reform will be. Regardless of where things land, a new survey of health system leaders conducted by Premier Inc. found that managing costs is their top priority.

Coverage of the survey in Healthcare Finance noted that C-suite executives are focused on improving productivity and reducing supply chain inefficiencies, pharmaceutical costs and clinical variation.

Another priority in the C-suite, according to the survey, is moving from meaningful use to meaningful insight. Systems are looking beyond recording data and are increasingly integrating and combining data to streamline analytics on supply chain, financial and clinical care.

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Curing What Ails the Healthcare System: Shared Responsibility

Recently, I’ve written about how cost-cutting alone will not keep healthcare organizations in the black. We’ve heard it from analysts, and recently, article in HealthLeaders, we heard it from Otis Brawley, MD, chief medical officer of the American Cancer Society.

In the article, Dr. Brawley cites staggering statistics about how much we spend, and will continue to spend, on healthcare and lays out what he thinks is a solution: promoting shared responsibility. And that means everyone: doctors, healthcare systems, insurers, drug companies, lawyers, patients, etc.

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When the Low Hanging Fruit Has Been Picked, What’s Next? Value!

New reimbursement models have forced hospitals and health systems to go after all of the low hanging expenses they can. But cost-cutting alone—stuff and staff—will not produce the total savings needed. A recent article in HealthLeaders points out that successful healthcare organizations are taking a much closer look at their supply chain in order to create strategic savings opportunities.

In the article, Steve Cashton, director of purchasing and contracting at Boston-based Beth Israel Deaconess Medical Center (BIDMC), a teaching hospital of Harvard Medical School, says, “You really can’t cut your way to success by reducing staff so we started looking at where we can improve our margins with the supply chain.”

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Create New Organizational Structure to Successfully Reduce Costs

Annual cost reduction targets have most healthcare organizations scrambling. Despite concerted efforts, many internal cost reduction initiatives “fail to produce the level of savings required” as Liz Kirk writes in Healthcare Finance News.

Why is that? Many factors can contribute to the success or failure of an organization to achieve savings’ goals, but the most common mistake is not taking a holistic approach. Ms. Kirk contends that rather than a conventional cost reduction approach lead by the CFO, a successful initiative should include the financial and operational senior leaders, as well as support teams and cost leaders. The key is to effectively balance quality and patient satisfaction with savings.

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How Will Recent Healthcare Legislation Disrupt How Labs Conduct Business?

Over the past couple of years, I have often written about the challenges confronting hospitals and health systems as a result of the Affordable Care Act. And now, new legislative changes in healthcare laws are impacting another segment of the healthcare supply chain: laboratories.

Two weeks ago in New Orleans, the 19th Annual Executive War College on Laboratory and Pathology Management brought together 800 clinical laboratory professionals and pathologists. One of the major topics covered was the legislation passed by Congress and recently signed into law by President Obama called “Protecting Access to Medicare Act of 2014” (PAMA). In his keynote address, Robert L. Michel, founder of the Executive War College, said that PAMA is the single biggest change to the clinical laboratory industry in more than 25 years.

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Stretching Outside of the Four Hospital Walls

Not long ago, adding more patient beds was the principle capital expenditure for many health systems and hospitals. But in today’s environment of value-based care, that has changed.

Healthcare leaders are shifting their capital strategies. According to “Reevaluating capital spending strategies”, from Healthcare Finance News, “As healthcare reimbursement shifts from a system that rewards quantity of care to quality of care, the onus is on the CFO to determine where best to allocate financial resources.”

Now, in order to provide care outside of traditional settings, systems focus on outpatient care and deploy capital to acquire physician practices that grow their reach.  Systems are also more prudent about equipment purchases and work to share equipment between facilities.

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Integration: Early in the game of healthcare reform

At the recent annual J.P. Morgan Healthcare Conference in San Francisco—“where Wall Street meets healthcare to talk business,” according to HealthLeaders the themes ranged from preparing for the newly insured to continuing the expansion of clinically integrated networks. The conference included both for-profit and not-for-profit health systems discussing what had helped make them successful in this early stage of healthcare reform.

Clinical integration is a hot topic for any healthcare system, regardless of profit status in this early stage of healthcare reform. And that’s because success is dependent on it. As Chicago-based Advocate Health Care executive vice president Lee B. Sacks MD noted at the conference, “Clinical integration has allowed us to advance in value-based care.”

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Integration is critically important, yet many healthcare organizations aren’t prepared

We are well aware that the healthcare industry is in a time of tremendous consolidation with a greater than 50% increase in consolidation just since 2009. Since that activity is expected to continue through 2014, we wanted to get a sense for how successfully hospitals and health systems have been at integrating new facilities. To do that, MedSpeed conducted a survey in conjunction with HealthLeaders Media’s Leadership Council.

The survey polled 138 senior leaders across the healthcare spectrum, including hospitals, health systems, physician practices and payer organizations. Of those surveyed, 73% said that physically integrating materials and supplies is either “critically important” or “important” to their organization’s success in providing quality care.

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What the Future Holds for Healthcare

This year, 2013, will be an incredibly busy year in healthcare. With just one more year before the largest parts of the Patient Protection and Affordable Care Act (PPACA) take effect, healthcare organizations are preparing for the biggest changes in healthcare in more than a generation.

Since the actual legislation is 900+ pages, I don’t know too many people who have read the entire thing. That is probably why there have been a plethora of summaries published since the act passed.

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Sustainability Can Really Pay Off

The core mandates of the Affordable Care Act are to increase access to healthcare, while decreasing costs and limiting waste. Every U.S. healthcare organization today is looking for ways to align with healthcare reform in order to meet these goals. While companies are instituting a number of different initiatives, there is one that we believe strongly in that has recently been getting more and more interest from the industry – sustainability.

According to a recent study from the Commonwealth Fund, sustainability initiatives could save the healthcare industry up to $5.4 billion over five years, and $15 billion over 10 years. Those are some really big numbers.

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