Streamlining Hospital Operations To Cut Healthcare Costs

Hospitals are the cornerstone of a nation's healthcare system, providing life-saving care to millions of patients annually. However, hospitals face financial pressures from rising costs, inadequate reimbursement, and shifting care patterns due to policy changes and an ageing population with complex, chronic conditions. To reduce costs, hospitals must focus on streamlining administrative processes, leveraging technology, optimizing contracts, and reducing post-acute care. They must also be mindful of cost-cutting measures that may compromise patient care and explore innovative strategies, such as automation and artificial intelligence, to improve productivity and reduce expenses. Additionally, hospitals can review contracts with external vendors, optimize prescription drug costs, and improve environmental services to reduce healthcare-associated infections (HAIs) and their financial penalties. These strategies help hospitals maintain financial stability while delivering high-quality care to patients.

Reduce supply costs and review external vendor contracts

Reducing supply costs and reviewing external vendor contracts are key strategies for large hospitals aiming to cut expenses without compromising patient care. Here are several ways hospitals can achieve this:

Reducing Supply Costs

• Standardization: Hospitals can benefit from standardization, especially large organizations with various business units, each with its own best practices. Standardizing practices across the hospital can help reduce supply costs.
• Digitization: Paper-based medical records are costly to maintain and require significant physical storage space. They also require printing, faxing, copying, and shipping, which can be time-consuming and prone to damage. By digitizing records, hospitals can free up space, reduce direct energy costs, and improve efficiency.
• Prescription Drug Costs: Optimizing prescription drug costs can lead to significant savings. This is especially relevant given the large number of Americans who regularly take medications to manage chronic conditions.

Reviewing External Vendor Contracts

• Outsourcing Non-Core Functions: Using third parties for non-core functions, such as human resources, food services, IT, lab services, and more, can help reduce overhead costs. However, this approach requires careful management of multiple vendor contracts to ensure the quality of services.
• Automation: Automation and artificial intelligence (AI) can reduce reliance on external vendors for certain tasks. For example, automation can be applied to appointment scheduling, sending pre-visit intake forms, and processing prescription refills, reducing the need for external vendors in these areas.
• Contract Optimization: Hospitals should periodically review and optimize their contracts with external vendors to identify areas for cost savings. This may involve negotiating better rates, consolidating vendors, or finding alternative suppliers who offer more competitive pricing.

By implementing these strategies, large hospitals can significantly reduce supply costs and improve the efficiency of their external vendor contracts, ultimately contributing to their overall financial stability.

Adopt AI and automation to reduce human intervention

Hospitals can leverage AI and automation to reduce human intervention and, in turn, cut healthcare costs. AI solutions can combat alarm fatigue, a common issue in clinical settings, by filtering out unnecessary notifications. This ensures that healthcare providers can focus on critical, truly urgent signals, thereby improving patient safety and care efficiency. AI can also enhance remote patient monitoring through wearable technology, allowing clinicians to continuously track a patient's well-being and respond promptly to any concerning changes.

AI is particularly useful in the realm of predictive analytics. AI systems can analyze patterns in a patient's medical history and current health data to predict potential health risks. This enables healthcare providers to offer proactive, preventative care, leading to better patient outcomes and reduced healthcare costs. For example, AI can be applied to the early detection of diseases, such as cancer, by analyzing large datasets of medical images and patient records.

AI can also streamline various administrative tasks within healthcare facilities, such as scheduling appointments and processing insurance claims. This reduces the administrative burden on healthcare providers, allowing them to focus more on patient care and improving the overall patient experience. Additionally, automated insurance approvals and billing processes can reduce red tape and waiting times, improving efficiency and patient satisfaction.

In the medium term, AI is expected to significantly impact the development of powerful algorithms that are efficient and able to handle unlabelled and unstructured data. This will further enhance the accuracy and speed of AI systems in healthcare, leading to improved diagnosis, treatment, and patient care. AI is already making strides in precision diagnostics, such as diabetic retinopathy detection and radiotherapy planning, and is set to play a more significant role in the future of healthcare.

Streamline administrative processes to reduce costs

Streamlining administrative processes is a critical strategy for hospitals to reduce costs. By optimizing workflows and leveraging technology, hospitals can significantly lower expenses.

One effective approach is to implement electronic health record (EHR) systems. EHRs improve information sharing between healthcare professionals, streamline data administration, and eliminate outdated paper-based records. This results in enhanced care coordination, reduced medical errors, and more efficient workflows. For example, EHRs can automate hospital admission documentation, saving time and resources.

Additionally, hospitals can benefit from adopting artificial intelligence (AI) and automation. These technologies reduce the need for human intervention in administrative tasks such as data entry, reporting, claims processing, and data sharing. By automating repetitive tasks, hospitals can optimize staff utilization, allowing employees to focus on specialized work. AI and automation can also improve the patient experience by streamlining appointment scheduling, pre-visit intake forms, and prescription refills.

Another strategy to streamline administrative processes is to digitize documents and records. Paper-based medical records are costly to maintain, requiring physical storage space and incurring printing, faxing, and shipping expenses. They are also susceptible to damage. By transitioning to digital records, hospitals can free up space for revenue-generating services and reduce energy consumption from peripheral devices. Offsite cloud-based storage further reduces direct energy costs and improves data security.

Furthermore, hospitals should review and optimize contracts with external vendors. By identifying infrequently used high-cost or low-value services, hospitals can negotiate better terms and reduce unnecessary expenditures. This process can help streamline operations and ensure cost-effectiveness in vendor management.

Finally, hospitals can improve environmental services to reduce costs. By enhancing air quality and overall cleanliness, hospitals can lower the risk of healthcare-associated infections (HAIs). This not only contributes to cost savings by reducing infection rates and associated penalties but also improves the work environment for staff.

By implementing these strategies to streamline administrative processes, hospitals can significantly reduce costs, improve operational efficiency, and ultimately enhance patient care.

Reduce post-acute care to lower expenses

Hospitals are facing a multitude of financial pressures, including rising costs, inadequate reimbursement, and shifting care patterns driven by policy changes and an aging, sicker population with complex, chronic conditions. One way large hospitals can reduce healthcare costs is by reducing post-acute care expenses.

Post-acute care (PAC) refers to services provided by skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs) to help patients recover from surgery, medical procedures, or other maladies. PAC is an area where hospitals can significantly reduce costs as it accounts for about $60 billion, or 15%, of Medicare spending annually.

One strategy to reduce PAC expenses is to minimize medically unnecessary days from a patient's SNF stay. SNFs represent a significant proportion of Medicare costs and are paid on a per diem basis. By using predictive analytics, hospitals can make informed decisions to improve patient outcomes, reduce post-acute length of stay, and optimize PAC utilization. For example, the three-day rule for Medicare patients reduces the cost of SNF care after three days of inpatient stay. Hospitals can also engage vulnerable patients earlier in their care journey, providing needed services and limiting costs associated with poor outcomes. Patient involvement in discharge planning can also lead to fewer readmissions and lower healthcare costs.

Additionally, hospitals can build and manage a high-performing post-acute network with risk-adjusted, real-time, and payer-agnostic data. This enables them to make informed referral decisions and optimize PAC utilization, especially for older, higher-acuity patients. Furthermore, hospitals can leverage technology to improve productivity and reduce administrative burdens. By automating or augmenting certain processes, hospitals can generate cost savings.

By implementing these strategies, large hospitals can effectively reduce post-acute care expenses, thereby lowering overall healthcare costs.

Improve environmental services to reduce healthcare-associated infections

Hospitals are facing a perfect storm of financial pressures, including rising costs, inadequate reimbursement, and shifting care patterns driven by policy changes and an older, sicker population with more complex, chronic conditions. To reduce healthcare costs, hospitals can leverage technology to improve productivity and automate processes. They can also focus on optimizing traditional, high-value operations and reducing operating expenses.

One critical area where large hospitals can reduce costs is by improving environmental services (ES) to prevent healthcare-associated infections (HAIs). HAIs can be life-threatening, especially for vulnerable patients, and can result in significant costs for hospitals. Here are some ways to improve environmental services and reduce HAIs:

Proper Hiring, Training, and Management of Staff

Hospitals should ensure proper hiring and training of ES staff. This includes providing dedicated trainers who are responsible for quality control and retraining employees as needed. A well-structured training program can teach employees the proper cleaning techniques for different areas of the hospital, such as patient rooms, intensive care units, common areas, and administrative areas. Additionally, hospitals should address gaps in coverage due to staff turnover and ensure adequate supervision and management of ES staff.

Efficient Layout and Workflow

The design of ES work areas and the efficiency of workflow are crucial. A poor layout and workflow plan can reduce the productivity of housekeeping staff, impacting their ability to maintain a clean and safe environment. Hospitals should optimize the layout of ES departments, ensuring easy access to supplies and efficient dispersal to assigned areas.

Monitoring and Assessment of Environmental Cleaning

It is essential to monitor the effectiveness of environmental cleaning services to prevent HAIs. While visual inspection is the simplest method, technology-based approaches, such as using aerobic colony counts (ACCs), can provide more accurate assessments of environmental contamination. Hospitals should also implement strategies to assess compliance, such as checklists, direct observation, and surveys of personnel and patients.

Hand Hygiene and Infection Control Procedures

Promoting and monitoring hand hygiene among healthcare workers and visitors is crucial in reducing HAIs. Additionally, infection control procedures, such as using EPA-registered chemical germicides for cleaning and disinfecting medical equipment, can help prevent the spread of pathogens.

By focusing on these areas, large hospitals can significantly improve environmental services, reduce healthcare-associated infections, and ultimately lower their healthcare costs.

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