Anne Papik

Cost Containment Corner - Five steps to cost efficiency

November 27, 2015
Now more than ever, hospitals are driven to become more cost efficient while delivering high-quality patient care. With reimbursement reductions and the movement toward capitated payments, hospitals and health care facilities need to identify redundancies and cost saving opportunities. There are five immediate steps that health care facilities can take to begin containing excess costs.
 
1. Increase throughput
Today, hospitals in the U.S. spend approximately $11 per second, per patient, a statistic that has been borne out in my own experience. Given the high cost of operations, hospital administrators must find practical ways to boost the speed of patient throughput. Selecting a well-rounded equipment service provider can lead to equipment efficiencies, particularly if the provider offers a large breadth of services and a well-trained team. Hospitals and health care facilities should ensure that personnel are well-versed in operating equipment and troubleshooting to speed up the process while improving quality of patient care. Many service providers now offer both biomedical training and clinical training for in-house hospital staff to manage this process.
 
2. Consolidate service suppliers
Rather than working with multiple equipment service suppliers, hospitals may look to consolidate with one provider. OEM providers today can replicate services across multiple pieces of equipment. Multi-facility health care organizations can also implement a service strategy that balances skills across nearby facilities. A reputable multi-vendor provider can likely service multiple locations and facilities that are within close proximity to one another. Hospitals can benefit from greater predictability, control and cost savings.
 
Health care facilities should institute a vetting process in order to set up a successful relationship. There are many service providers that will claim they can “service and fix” your medical equipment for less than you are currently spending. Few of these providers can deliver cost savings plus comprehensive solutions across the entire health care continuum. Health care organizations should select a service provider that has the flexibility to meet various service needs.
 
3. Reduce redundancies
A number of processes within health care organizations are redundant and inefficient. Redundancies often result from hospital consolidations, which create duplicate procedures and support structures — most often these are back office processes, including invoicing and billing. Organizational leaders should apply lean concepts to eliminate non-value-added activities from the organization. Smaller facilities are at a particular advantage in this area, as they are less likely to have internal bureaucracy limitations.
 
4. Delay equipment purchases in the short term
Larger health care facilities often have an advantage here, as they can afford to take larger risks in delaying equipment purchases as long as equipment is strategically redundant across an organization. Smaller organizations do not always have this luxury. Facilities can extend the life cycle of aged equipment wherever possible, assuming that it does not create unplanned downtime. Talk to your equipment service provider about potential technology upgrades on older systems that may give you functionality for a few more years at lower operating costs.
 
5. Replace older equipment in the long term
In the case that equipment has aged to the point that it is no longer economically feasible to maintain, facilities must look for newer replacements. Regardless of whether a facility purchases new or refurbished equipment, or chooses to delay replacement, in all cases an asset management strategy should be implemented. The asset management strategy should focus on maintenance and overall equipment life cycle management.
New managed services and enterprise partnership models with service providers offer a way to centralize technology management efforts. These partnership arrangements typically include technology planning and services, education and training, business and clinical consulting, patient-centric design and other value-added services. Institutions with an aging technology base and capital constraints may realize significant cost improvements and transformation gains by means of this model.
 
Before taking any or all of these steps, a health care facility may consider partnering with a service provider that can analyze cost and operational efficiencies. Once armed with benchmarking information, hospitals and care centers may implement a plan to efficiency.
 
Anne Papik is the senior director, customer services operations, Philips North America.