Finding out new ways to reduce healthcare spending is a priority in many hospitals as the cost of healthcare continues to rise up. But providing cost-effective care is still a tricky subject. In order to reach this goal, a hospital needs to use methods that not only promote cost-efficiency, but also maintain a high quality of care.
By next year, health expenditure is expected to reach $4 trillion. Now is the best time to identify key areas that will improve cash flow and utilization. Below are some measures that will slash waste, improve cost-efficiency, and better patient satisfaction.
- Improve drug selection
Physicians have a big impact on drug spending so there should be more consideration when it comes to prescribing high-cost drugs. Cheaper alternatives should always be explored whenever available. This is particularly useful in cutting costs with inpatients because physicians have lesser impact on drug spending for outpatients. Still, improving drug selection and educational efforts benefit inpatients and outpatients alike.
- Pursue patient satisfaction.
Reports reveal net margins are 50% higher in facilities that put focus on patient experience and satisfaction. The office interaction of a patient transfers to how he or she perceives the quality of healthcare offered by the hospital. Moreover, a satisfied patient is likely to maintain the relationship with a provider and adhere to the treatment plan. All in all, prioritizing patient satisfaction improves health outcomes and develops the patient’s loyalty to the hospital.
- Use technology correctly.
Certain technologies help hospitals improve revenue cycle performance. For example, using telehealth technology aids in lowering readmission rates by improving the follow-up care and management of patients. Readmissions are prevented and the costs associated with it are completely eliminated.
Also, adding clinical decision support systems help. Support systems are helpful in lowering the number of unnecessary lab tests ordered by physicians without affecting the quality of care. By overseeing laboratory utilization, repetitive and unnecessary daily lab orders are avoided and costs are minimized. In a branch of the Veterans Health Administration, this strategy alone saved them over $150,000 per year.
- Reduce overhead costs.
Controlling non-medical spending is an effective way to reduce costs without sacrificing quality of care. Study your overhead and administrative costs. How much are you spending on shipping and delivery? Are you spending tons just to maintain the irrigation of your lawns? How big is your sales and marketing budget?
Before streamlining spending, the South Nassau Communities Hospital in Oceanside, New York paid $500,000 annually just for shipping. After checking landscaping irrigation, Beaumont Health System in Royal Oak, Michigan saved over $180,000 in six months.
Similarly, you can create more savings by negotiating better with your bank. Develop stronger relationships and get better deals than what you already have. While this does not affect patient care directly, it still serves as an excellent source of savings.
- Be more efficient with staffing.
If you have five healthcare managers doing the same function, you are likely to get five different programs that in reality only overlap each other. Alternatively, each of your managers may be trying to do too many things at once, resulting in weak outcomes and disorganized directives. You can avoid excessive spending in this department by eliminating unnecessary positions and consolidating work and management layers. Not only does this lower costs, it also promotes efficiency.
Outsourcing is another option. There are plenty of providers of external expertise and they are often more affordable. This strategy is best implemented in the following departments: finance, human resources, information technology, and labs and pharmacies.
It takes effort and smart strategic implementation to bring down the cost of providing economic yet high quality healthcare.Start by following the 5 tips above and see which areas of your hospital can be made more cost-effective.