Becker’s Hospital Review recently published an article on five common management mistakes within health systems that lead to failure and business erosion. The first among those listed was inadequate development of the next generation of leaders. When organizations neglect to develop second-tier leaders who can replace outgoing executives, the organization can struggle. According to the article, “many great health systems with wonderful CEOs do not have the depth to steer and drive the organization for the next generation. In fact, this lack of depth in leadership often causes systems to look for strategic partners.”

According to a survey administered by the Society for Human Resource Management, employees indicated that the most important factor in their job satisfaction involved opportunities to use their skills and abilities. The article states that many health systems have been guilty of not allowing great leaders to thrive, and that “a core job of leadership is to constantly be grooming and working closely with great people so there are always opportunities available for those people to thrive.”

Another common error in leadership involves inadequate planning for rapid changes in health IT systems, including revenue collection systems. As a case in point, one successful hospital fell into bankruptcy due to “uncollectibility over a sustained period of time.” CMO of McKesson Enterprise Information Solutions, Michael Blackman, MD, recommends that providers anticipate and plan for their IT needs well into the future.

Failure to develop a strong marketing brand in conjunction with a business strategy is another common oversight. Many community hospitals have seen their businesses decline because they neglected to define and differentiate their services from competitors.

The article also notes the potential pitfalls of expansion plans. One hospital deemed “hyper-successful” added a second facility, but ended up splitting cases with the first facility. The initial facility, which was highly profitable, was in essence replaced by two facilities that were both significantly less profitable.

You can view the article at Becker’s Hospital Review: http://www.beckershospitalreview.com/hospital-management-administration/5-core-management-mistakes-in-health-systems-key-causes-of-failure-and-business-erosion.html

Each year PricewaterhouseCoopers (PwC) interviews industry experts and healthcare consumers to produce a list of top issues impacting the industry. This informative report, which was published last month by PwC's Health Research Institute (HRI), devotes one page to each of the Top 10 issues and delves into the implications that each issue will have on the industry. Key data points are clearly presented and the report is a valuable resource for assessing major trends in the industry.

Citing a “profound transformation” occurring in the industry, PwC says “the healthcare sector will begin to look and feel like other industries, catering to audiences expecting one-click service [and] consumers are leading the way, bearing more of the cost of their own care—and making more decisions.”

Healthcare consumers are more price-conscious than ever before, with 82% indicating that price is an important factor when making decisions about healthcare. That trend is coupled with more physicians embracing “do it yourself healthcare,” including mobile health apps that monitor a patient’s vital signs, analyze blood, track medication adherence, etc.

Some of the key trends noted in the report include an unprecedented level of data sharing and transparency; the need for healthcare organizations to revisit regulations that allow non-physicians to provide more services; a requirement to fully integrate data from electronic medical records throughout the enterprise; and the need to pursue strategic partnerships that encourage innovation, lower costs and fill gaps in business operations.

You can access the PwC report at: http://www.pwc.com/en_US/us/health-industries/top-health-industry-issues/assets/pwc-hri-top-healthcare-issues-2015.pdf

CMS is developing and testing new payment and service delivery models in accordance with the Affordable Care Act and other legislation. Some models are designed to demonstrate whether various approaches are more effective than others at improving care and/or fostering innovation in the healthcare industry. There are seven broad categories used to group the models:

● Accountable Care
● Bundled Payments for Care Improvement
● Primary Care Transformation
● Initiatives Focused on the Medicaid and CHIP Population
● Initiatives Focused on the Medicare-Medicaid Enrollees
● Initiatives to Speed the Adoption of Best Practices
● Ways to Accelerate Testing of New Payment and Service Delivery Models

CMS provides a website (link below) that displays the various models and their current status, for example, whether they are Under Review, Accepting Applications, Ongoing, No Longer Active, etc.

The information available at the website can help you stay informed about changes as they evolve; other resources allow you to identify hospitals and other healthcare providers that are participating in the various programs.

As an example of the type of information that is available, one “demonstration model” tracked patients after they left the hospital to determine whether hospital-physician collaborations prevented complications, avoided duplication of services, improved quality and/or eliminated unnecessary costs. You can access these resources as well as other data and reports at: http://innovation.cms.gov/initiatives/index.html#views=models

Almost three-quarters (71 percent) of ER doctors who responded to a survey said they treat patients every day who come to the ER after first seeking help at urgent care centers. Over 2,800 members of the American College of Emergency Physicians (ACEP) participated in the survey, which was published this week.

Sixty-five percent of the respondents indicated that patients are redirected to the ER due to the lack of needed equipment at urgent care centers or due to limited staffing. Ninety percent of the ER physicians said the top reason that patients were being redirected was due to the fact that the patient’s medical condition was more serious than could be treated at an urgent care center.

Many urgent care centers are being marketed as substitutes for emergency care, however they are often more suited to address common medical problems, such as sprains or minor cuts that require stitches.

Other results of the survey include the following:

>> 86% of participants said at least one urgent care center operates within 10 miles of their emergency department; 76% said there was more than one.

>> 21% reported a decline in emergency visits while 16% reported an increase in ER visits.

>> 51% said urgent care centers will pull patients from both ER care and primary care, while 22% said that urgent care centers will pull more patients from primary care.

>> 90% reported that patients were unable to determine whether they should seek medical care at a hospital emergency department or an urgent care center.

You can download the 28-page report via the link listed at the bottom of the ACEP news release at: http://newsroom.acep.org/2014-12-08-urgent-care-or-er-for-holiday-injuries-new-poll-says-some-patients-get-it-wrong

After analyzing trends in healthcare technology, industry analyst firm IDC released its predictions for 2015. The data provides useful insights into the evolving issues that hospitals will face over the coming years, helping senior leaders to identify opportunities for improvement in their organizations as well as plan for future growth. Among those trends listed by IDC are the following:

>> Operational inefficiency will become critical at 25% of hospitals, resulting in the development of a data-driven digital hospital strategy requiring a budget in 2016.

>> 15% of hospitals will create a comprehensive patient profile by 2016 that will allow them to deliver personalized treatment plans.

>> 65% of consumer transactions with healthcare organizations will be mobile by 2018.

>> 70% of healthcare organizations worldwide will invest in consumer-facing mobile applications, wearables, remote health monitoring and virtual care by 2018.

>> By 2015, 50% of healthcare organizations will have experienced one to five cyber-attacks in the previous 12 months with one out of three attacks resulting in a breach.

These factors and other listed by IDC (link below) will help hospital executives refine their road maps for investments in health information technology. The data also helps leaders prepare for the impacts that these trends will have on their organizations.

To learn more, visit the IDC website at: http://www.idc.com/getdoc.jsp?containerId=prUS25262514

Chief Strategy Officer, Chief Population Health Officer and Chief Experience Officer are some of the titles increasingly emerging within the healthcare industry. In a survey of 323 clinical and human resources leaders from healthcare organizations nationwide, 16% of respondents indicated they were currently recruiting or planning to recruit leadership positions with titles such as VP of Patient Experience and Chief Experience Officer, to be in charge of patient experiences across health systems with the goal of sustaining and improving loyalty.

The survey, conducted by the Center for Professional Advancement at AMN Healthcare, captured responses across 37 quantitative and 15 qualitative areas. Chief Strategy Officers and similar roles are dedicated primarily to understanding and managing the cost/value proposition as well as the risk-to-payoff ratio for each strategy. Chief Population Health Officers and similar positions are focused on identifying disease trends and risk factors, and then ensuring programs are developed to address those factors.

Other roles are still emerging and will continue to develop, including Clinical Transformation Officer, which includes responsibilities for managing a healthcare system’s “transition from volume to value, including care infrastructure, staff management, IT changes, care continuum partner engagement and other duties tied to system reorganization.”

Healthcare firms are at the early stage of rolling out these new positions and responsibilities. According to the report, awareness of the need for these positions continues to build across the healthcare industry.

The 25-page report can be downloaded at: http://www.amnhealthcare.com/uploadedFiles/MainSite/Content/Workforce_Solutions/Survey-Emerging-Roles-in-Healthcare-2014.pdf

Today’s blog continues our discussion from last week on the changing expectations of healthcare consumers. A report published last month by the management consulting firm Oliver Wyman delves into the ongoing “volume-to-value” revolution and how technology is upending the status quo.

The report discusses how factors such as the increasing deployment of retail clinics in big-box stores, the use of “smart care” teams, and even personal fitness devices are contributing to the development of “a new health market where demand trumps supply.”

According to the authors of the report, this ongoing transformation in the healthcare industry provides great opportunities, showing how “traditional players and new entrants can do more than participate in this value shift, but lead it through innovative business models and partnerships.”

Inflows of venture capital are accelerating in the healthcare industry to take advantage of this “Health Market 2.0.” A market of at least one trillion dollars is in play to address key issues in the industry, including: increasing complexity, persistent lack of transparency, slow-moving processes, and the overall inconveniences that are motivating healthcare consumers to change their behaviors.

For more information and to download the report, visit: http://www.oliverwyman.com/insights/publications/2014/oct/the-patient-to-consumer-revolution.html#.VGPnxvnF9Zs

PricewaterhouseCoopers (PwC) published a report last month about the changing expectations of healthcare consumers. Based on a survey of more than 2,300 U.S. residents, the report paints a picture that the “winners” in this evolving environment will be those firms that can differentiate their healthcare services in three ways, through:

● Consumer Choice
● Consumer Engagement
● Consumer Experience

Some key data points from the report include the following:

>> Only 49 percent of respondents were satisfied with their overall healthcare consumer experience.

>> Healthcare providers that can tailor their service lines to various segments will be able to “flip today’s unsatisfying consumer experience on its head and win the loyalty of increasingly discerning healthcare consumers.”

>> Although the data shows that price remains a primary consideration overall, consumers, particularly older ones, will pay more for non-price attributes such as brand, service, and network.

>> Growing dissatisfaction about healthcare delivery is creating openings for new entrants to further disrupt the landscape, including retailers like Target and Walmart or digital companies such as Google and Amazon.

>> More than 25% of respondents listed “digital” as their preferred method of engagement in their healthcare, as opposed to office visits or phone consultations.

The report emphasizes that maintaining the status quo is no longer an option for healthcare providers and payers. Additionally, there are great opportunities for organizations that can capitalize on these trends. To access the report, visit the PwC website at: http://www.strategyand.pwc.com/global/home/what-we-think/reports-white-papers/article-display/birth-of-healthcare-consumer

Becker's Hospital Review recently published a list of “100 Healthcare Statistics to Know.” Reviewing this list is a great way to test your overall awareness of key facts about the industry. All of the data helps put into perspective how wide-ranging the industry is, including how diverse factors come together to shape new trends. Here’s a sampling:

There are 5,723 hospitals in the country, 4,999 community hospitals and 1,326 critical access hospitals.

There are about 5,500 ambulatory surgical centers in the country.

On average, only 71 percent of patients said, yes, they would definitely recommend the hospital they attended to friends and family.

According to Kaiser State Health Facts, non-profit hospitals spend the most on inpatient stays compared to other hospital ownership types: adjusted expenses per inpatient day by ownership type: non-profit hospitals, $2,088; state/local government hospitals, $1,667; for-profit hospitals, $1,628.

Across all specialties, about 21 percent of physicians are employed by a hospital.

As of April 2014, more than two-thirds of Americans live in areas served by an ACO and more than 40 percent live in areas served by two or more ACOs.

The global mobile health (mHealth) market is expected to be worth approximately $49.1 billion by the year 2020.

Medicaid costs were $432 billion in 2012, of which the nonfederal share was $180 billion.

Registered nurses earn an average national estimated wage of $68,910 and nurse practitioners earn an average national estimated wage of $95,070.

To view the entire list, visit Becker's Hospital Review at http://www.beckershospitalreview.com/hospital-management-administration/100-healthcare-statistics-to-know.html

Earlier this month, U.S. News & World Report held its second annual “Hospital of Tomorrow” conference in Washington DC. In a special report available on their website (link below), you can access conference presentations and other materials.

An executive roundtable discussion, “Navigating a New Era in Health Care,” provides valuable insights. Other topics addressed at the conference include the following:

>> Value-Based Healthcare Delivery
>> Provider and Patient Engagement
>> Data, Information and Transformation
>> The Changing Face of the Healthcare Ecosystem
>> Population Health Management

Across the country, hospitals are experimenting with new ways to deliver healthcare, including sending doctors on house calls and putting nurses in community facilities such as the YMCA. Other experiments include screening patients for mental and behavioral health problems, which often interfere with treatments.

Integrated health systems have an advantage in the new environment because, for example, they can more effectively analyze electronic health records and other data to identify patients that would benefit from home-based visits. Often, patients with heart failure, pneumonia and other conditions can be treated in their own homes more effectively and efficiently. Technology developments, such as telemedicine and telemonitoring, are giving clinicians real-time access to patients as well as the ability to easily check vital signs between visits.

For more information on topics covered at the U.S. News & World Report’s “Hospital of Tomorrow” conference, visit: http://health.usnews.com/health-news/hospital-of-tomorrow

In a report issued last week, Altarum’s Center for Sustainable Health Spending (CSHS) noted a 50% increase in job growth across the healthcare industry, which added an average 22,600 new jobs per month over the previous six months. The report states that “solid continued growth seems likely” because the recent rate of job openings is the highest seen since before the economic downturn began.

CSHS issues monthly reports (link below) that are “designed to address significant shortcomings in the availability of timely economic data on the health sector, including employment, spending, and prices.”

Charles Roehrig, director of CSHS, stated, “Two months ago, we were seeing no acceleration in healthcare employment. However, with the upward revision to July and strong August and September growth, the picture has transformed into a significant jump in the second quarter that has continued through the third quarter.”

Highlights of the September 2014 report include the following:

>> Hospitals gained 6,200 jobs during September, compared with a 24-month average gain of 1,400.

>> Ambulatory healthcare services added 14,200 jobs last month, which is below the 24-month average gain of 16,000.

>> Ambulatory services accounted for 45% of healthcare employment, hospitals accounted for 33%, and nursing and residential care accounted for 22%.

>> Over the past 12 months, outpatient care centers grew at the fastest rate, 4.8%, while adding 33,000 jobs.

Altarum is a non-profit research organization with clients in the public and private sectors. For more information and to access the CSHS monthly reports, visit: http://altarum.org/our-work/cshs-health-sector-economic-indicators-briefs

It’s helpful to stay informed on healthcare industry lawsuits because they indicate potential pitfalls in executive management decisions. Becker’s Hospital Review regularly publishes articles on legal actions occurring in the healthcare industry, and last week they provided a roundup of recent court activities, including the following:

In Pennsylvania, a group of hospitals has initiated a lawsuit against insurer Highmark and its subsidiary Keystone Health Plan West over reduced reimbursements for Medicare Advantage patients.

In Massachusetts, nurses have sued Brigham and Women’s Hospital in Boston for a policy that would require nurses to receive flu shots to keep their jobs.

In Alabama, a federal judge refused to dismiss a class-action lawsuit against Flowers Hospital over an employee who stole patient data.

In New Jersey, the State Supreme Court ruled that hospitals aren’t required to release documentation gathered during an internal examination of malpractice cases.

In California, the advocacy group Consumer Watchdog has sued Cigna and Blue Shield of California over narrow networks; the lawsuits allege that hospital and physician networks offered by the insurers are insufficient, and that consumers were provided inaccurate information about in-network providers.

Also in California, 33 Anthem Blue Cross members filed a lawsuit against Anthem Blue Cross of California, saying the company misrepresented the size of its networks and the benefits provided in plans offered under the Affordable Care Act.

You can learn more about these lawsuits and others at Becker’s Hospital Review: http://www.beckershospitalreview.com/legal-regulatory-issues/10-latest-healthcare-industry-lawsuits-settlements-oct-3.html

According to an article published last week by Reuters, 40% of healthcare organizations reported a criminal cyber-attack in 2013, which is a dramatic increase since 2009, when only 20% reported being attacked.

A major reason for the increasing attacks against the healthcare industry is that medical information typically contains data such as names, birth dates, policy numbers and billing information—and this data is much more valuable than stolen cred card data, up to 10 to 20 times more valuable on the underground exchanges where hackers sell the data.

Stolen health data can also be used to buy pharmaceuticals and even medical equipment, which can then be resold. Additionally, a patient ID number can be combined with a fraudulent provider number, which can then be used to file sham claims with health insurers.

Compounding the problem is that, unlike credit card data theft, medical identity theft can go unreported or unnoticed for years, giving criminals a much longer time to use the data. As the article states, “Healthcare providers and insurers must publicly disclose data breaches affecting more than 500 people, but there are no laws requiring criminal prosecution. As a result, the total cost of cyber-attacks on the healthcare system is difficult to pin down.”

This is a subject that should be top-of-mind for hospital executives beyond the IT department. To learn more, see the Reuters article at: http://www.reuters.com/article/2014/09/24/us-cybersecurity-hospitals-idUSKCN0HJ21I20140924

The American Hospital Association (AHA) published a report last week on how continuing medical education (CME) can be better utilized by hospitals as a strategic resource. In addition to using CME primarily for sharing medical knowledge, the AHA recommends it should also be used to develop “professional and institutional competencies that might be necessary to transform care, improve outcomes, and practice efficiently and effectively in the hospital setting.”

Hospitals spend almost $1 billion annually to fund CME, accounting for about 35 percent of all CME and 38 percent of all CME hours. Increasingly, hospitals are looking for ways to derive more value from those investments. In a recent survey, AHA members indicated there was significant room for improvement in areas such as emphasizing clinical integration, system-based care delivery, and communication across the continuum of care.

After examining the value that CME delivers to hospitals, the AHA published its findings in a 20-page report that includes insights on how to improve CME. In the report (available at the link below), the AHA identifies case studies that illustrate how hospitals are using CME to improve performance and better align the components of healthcare delivery.

The overarching theme of this report is an AHA call-to-action for “greater use of performance-based CME” to adapt to the changing landscape in healthcare delivery. You can download the AHA report at: http://www.ahaphysicianforum.org/cmereport

America’s Health Insurance Plans (AHIP), the trade association that represents over 1,300 health insurance companies, made newsworthy comments last week on the relationship between hospital M&A activity and rising costs for patients and employers.

AHIP Vice President of Communications, Brendan Buck, is quoted in a September 12 article published in the Chicago Sun-Times, saying, “Bigger hospitals really only mean bigger bills for patients,” and “consolidation promises greater efficiency, but all that ever materializes is greater costs.”

The comments were spurred by a proposed merger in the Chicago area between Advocate Health Care and NorthShore University HealthSystem. The combined entity would result in forming the 11th largest tax-exempt hospital operator in the country.

According to the Sun-Times article, insurers are becoming “outspoken critics of the hospital merger wave,” and with the increase in M&A activity insurers “see providers of medical care battling back against value-based care.”

The issues are plain to see: bigger hospitals have greater leverage when negotiating with insurers and employers; at the same time, larger hospitals can limit the choices available to patients, which can also increase out-of-pocket costs for healthcare consumers.

Also, the Chicago-area business community views the proposed merger as a negative development because reduced competition will “negatively impact prices.”

But, what does the data say? Two studies, one by the National Institute for Health Care Management, University of California, Berkeley (2011), and another published by the Robert Wood Johnson Foundation (2012), found that less competition and hospital consolidation resulted in higher prices.

For more information on those studies and related information, see the article in the Chicago Sun-Times at: http://politics.suntimes.com/article/chicago/hospital-mergers-may-lead-higher-prices/fri-09122014-1055pm

The Harvard Business Review published a blog last week titled, “Nine Habits That Lead to Terrible Decisions.” The authors conducted a study to determine the factors that contribute to poor decisions. After analyzing data from 50,000 leaders, they found nine factors that can contribute to a bad decision.

Their analysis compared leaders who were “perceived to be making poor decisions” with leaders who were “perceived to be making very good decisions.” The list below is prioritized in order, starting with the most significant factor:

1) Laziness – regardless of the “perception versus reality” factor, these leaders were perceived to be sloppy in their work and unwilling to work hard.

2) Not anticipating unexpected events – it’s critical to develop a list of the problems that may arise from your decision.

3) Indecisiveness – when analysis takes too long, decisions get delayed and opportunities are missed; some leaders believe that a single mistake will ruin their careers, and as a result, they avoid prudent risk-taking.

4) Remaining locked in the past – it’s important to be innovative, and that requires looking for new approaches to solving problems.

5) Having no strategic alignment – every key decision must be part of an overarching strategy.

6) Over-dependence – if collaborative decision making gets bogged down, then act independently.

7) Isolation – it’s critical to collect input from experts, which requires good networking skills.

8) Lack of technical depth – complexity is increasing, and the best executives develop deep expertise, and they know how to find the right talent to help them.

9) Failure to communicate – sometimes good decisions lead to bad results merely due to poor communication about the decision itself, including why the decision was made and how it benefits the organization.

By keeping these factors in mind, you can improve your approach to executive decision making. To learn more, visit the Harvard Business Review blog at: http://blogs.hbr.org/2014/09/9-habits-that-lead-to-terrible-decisions/

In an article published last month, Billian’s HealthDATA noted a 37% increase in executive moves during the first six months of 2014 compared to the same period in 2013. These moves included CEOs, COOs, CFOs, CMOs, CNOs, VPs and Director-level positions.

To help determine how hospitals fill their new CXO slots, Billian’s teamed up with Porter Research to analyze trends found in a sample of 384 executive changes. Some of their findings include the following:

● 60% of hospital placements involved hiring an outside candidate
● 58% of new CEO hires were “stolen” from other hospitals
● 27% of new COO hires were “stolen” from other hospitals
● 44% of internal CEO promotions came from the COO position
● 17% of new COO positions were promotions from the CNO position

Also available at Billian’s website are a series of “Top 10” lists that you’ll find informative, such as:

● Largest hospital acquisitions ranked by bed size
● Top physician groups by number of MDs
● Top hospitals by net patient revenue

To learn more, visit the web resources linked below:

Hospital Hiring Trends:
http://www.billianshealthdata.com/news/SiteNews/news_items/2014/Hospital_C-suite_Trends-Whos_Making_it_to_the_Corner_Office

Top 10 Lists:
http://www.billianshealthdata.com/News/Vitals/InFocus/

Financial pressures continue to take their toll on rural hospitals. Many of these small facilities are working to develop and implement strategies to stay viable, however their situations are challenging, to say the least.

Here’s a roundup of recent activities occurring in several states, but these developments are representative of what is occurring in many communities across the country.

In Georgia, a “Rural Hospital Stabilization Committee” was created by Governor Nathan Deal in March to facilitate communications between hospitals and the state. The committee met earlier this week to evaluate how “free-standing emergency room models” could work in rural hospitals.

In Alabama, six rural facilities have closed in the previous 18 months, but 22 are experiencing serious financial pressures. In Tennessee, at least 28 hospitals are facing significant budget cuts or outright closures, such as Haywood Park Community Hospital, which stopped providing inpatient services July 31.

In Arkansas, Crittenden Regional Hospital in West Memphis announced it is closing September 7, and the East Texas Medical Center Regional Healthcare System recently announced it is closing its facility in Gilmer at the end of this year.

In South Carolina, where average occupancy rates are at 60 percent, some rural facilities are reporting rates under 10 percent. One S.C. facility with 59 beds, Wallace Thomson Hospital in Union County, operated for several years at less than 25 percent capacity. After adding over $20 million in debt to its balance sheet, it recently filed for Chapter 9 bankruptcy protection.

The “Post and Courier” newspaper in South Carolina recently reported that the state legislature has approved some funding to help hospitals “transition from business models based on filling beds to other models less reliant on inpatient services.” Other financial assistance is available through CMS, which recently extended its program to increase payments to hospitals with low Medicare inpatient volumes.

For more information on the state of rural hospitals, visit: http://www.fiercehealthfinance.com/story/rural-hospitals-struggle-keep-doors-open/2014-08-26

Becker’s Hospital Review recently asked 14 healthcare CEO’s to describe the most important aspect of their job. Some of their responses may surprise you.

Annette Cantino, CEO of a commercial insurer in New Jersey, replied, “Early on, it was clear to me that if I was going to build a successful business, it was going to be about building relationships. I figured out that relationships were built in business on the golf course, and that’s when golf started becoming such an important part of my culture, even though I had never golfed before.”

Here are excerpts from some of the other responses:

● Place top performers in the right positions to manage day-to-day operations.

● Develop strong leadership and culture in their organization.

● Create a future destination for your organization.

● Foster and support our team's culture.

● Lead by example.

● Listen.

● Nurture an innovative environment.

● Emotionally engage each and every member of the team.

● Assemble an outstanding team and then get out of their way.

To view the article, visit Becker’s Hospital Review at: http://www.beckershospitalreview.com/leadership-management/the-most-important-thing-a-ceo-does.html

Last week the American Hospital Association published an article about smart strategies to reduce costs. The article also includes a link to a 16-page report from Booz/PwC titled, “Health System Fitness: A Proven Approach to Transformational Cost Reduction.”

Five cost-cutting strategies discussed in the article are:

1. Team Up with Physicians – 80% of doctors say it’s possible to reduce costs without compromising clinical quality, although less than 20% of MDs say they have enough insight into their own costs per case.

2. Improve Efficiency of Clinical Utilization – Inefficient utilization involves inappropriate care or care that’s a mismatch for different types of medical staff; inefficient workflows and scheduling; the use of inconsistent treatment protocols; unnecessary variation in vendors and the supplies they provide; and unnecessary use of high-cost drugs.

3. Reduce Overhead – Consider centralizing activities involving human resources, marketing, finance and purchasing; consider outsourcing functions for HR, IT, finance, food services, labs and pharmacies; and investigate how automation can be used to streamline processes.

4. Organize Resources to Create Competitive Differentiators – Analyze the populations you want to serve and structure your services accordingly; consider offering services that complement (instead of compete with) other local facilities.

5. Implement Fundamental Changes – Consider collaborating with other facilities in the area; in a multi-facility network, develop a unified strategy that eliminates overlap.

Lastly, the authors advise executives not to overlook other opportunities to reduce costs, including in supply chain management, portfolio rationalization, new payment models and revised incentive structures.

The AHA article is available at: http://www.hhnmag.com/display/HHN-news-article.dhtml?dcrPath=/templatedata/HF_Common/NewsArticle/data/HHN/Daily/2014/Aug/080714-kaul-clinicalutilization