How Hospitals Can Reduce The Cost Of Health Care

It is possible for hospitals to reduce the cost of health care even as they improve on the quality of their care to patients and some ideas can be copied from the corporate world with modifications to address the unique aspects of the healthcare industry.

cost of health careThe writing is clearly on the wall for hospitals and health care facilities. They need to urgently reduce costs or end up perishing. But the situation is even more complex and challenging than that because hospitals also need to provide higher quality care even as they cut down on costs. This is a formidable challenge when you consider the fact that half of the hospitals in America are already making losses.But then nothing is impossible when you really set your mind to it and despite the odds it can still be done.

How To Reduce The Cost Of Health Care

Lean And Mean Works Best

Carefully studying how loss making organizations have been turned around to profitability can provide numerous useful ideas that can be applied to hospitals. How have businesses that were previously hemorrhaging red ink been turned around into highly competitive marketplaces? The vast majority have simply turned from fat and flabby to lean and mean animals capable of producing better quality products at a lower cost. Many lessons from the corporate world are applicable to hospitals with some modifications due to the unique nature of the healthcare system.

Reducing The Preventable

It is now generally accepted that reducing mistakes saves hospitals more money than layoffs. More so because these costly mishaps tend to happen in situations where under-staffed hospitals are unable to pay enough attention to individual patient needs. These hospital mishaps (also referred to as “never events”) range from small mistakes to major disasters and include infections, falls and erroneous amputations.

They have become even more costly in recent years. Medicare ceased to pay for any happening that is preventable in 2009. And that includes bed sores and pressure ulcers. Insurers are now going down the same road. Reducing these mistakes is not as simple as just increasing staff. Better systems and checks and balances can be a lot more effective.
Improvements on the supply chain

This is probably the area with the highest potential for cost reduction. Cash tied up too long in slow-moving inventory and the amount of internal warehouse space required to keep bigger supplies than is really necessary can often prove to be pretty costly to any hospital. Smaller batch deliveries done more frequently and other just-in-time-manufacturing methods can help a great deal in cutting down healthcare costs.

Reducing The Burden Of Costly Equipment

Medical equipment tends to be very expensive and yet can quickly become obsolete in some instances as medical research and technological breakthroughs continue to move at a breakneck speed. In any event new technology and equipment quite often helps to cut down on costs rather dramatically. A good example here are recent advances in non-invasive surgery which greatly reduces the duration a patient needs to spend recovering under hospital care. There are numerous other examples.

One very effective way in which equipment costs can be brought down considerably is through leasing equipment rather than purchasing it outright. This enables a hospital to stay with the latest equipment without spending massive sums of money to do so.

Canceling Construction And Expansion

The whole idea here is to increase capacity by making better use of existing resources and facilities. This makes it unnecessary to go ahead with costly expansion and construction projects. This is quite simple to implement and needs a careful study of the current situation followed by adjustments aimed at improving patient flow and preventing delays and hold ups along the way.

Eliminate Errors In Billing

The truth is that hospitals tend to lose more than they are prepared to admit through errors and delays in billing. These errors are costly in that bills may end up going out after a couple of weeks instead of days. On other occasions hospitals give away revenue when costly procedures done are never billed for correctly. Huge amounts can be saved simply by eliminating billing errors and delays.

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Re-examine Unnecessary Testing And Diagnostics

Inappropriate use of lab testing tends to add up quickly and at the end of the day the total sum becomes huge. For instance back pain patients will in most cases only require physical therapy rather than a CT scan. Being conscious of how better decision-making can dramatically reduce costs while being careful that this does not impact negatively on patient needs can go a long way in helping a hospital reduce on costs.

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