5 penny-pinching tips for hospitals

To survive in the tumultuous healthcare industry, hospitals around the country need to cut costs while maintaining workflow and maximizing efficiency, which can sometimes leave hospital employees demoralized and stressed, authors Anil Kaul and Jeffrey Mohr write in Hospitals & Health Networks.

However, lasting and meaningful change is possible when hospitals take strategic, integrated approaches that can cut up to 30 percent of operating costs and maintain sustainability and quality, write Kaul and Mohr, a partner and principal at Strategy&, respectively.

Hospitals can implement these five tactics to reduce costs:

  1. Team up with doctors: Physicians are integral to change at the hospital level--they bring insight, focus, commitment and accountability among their peers, Kaul and Mohr write. Specialty liaisons for departments can engage more doctors to evaluate different scenarios and gain consensus on what changes need to happen.

  2. Streamline clinic processes: Focus on fixing inefficient care, workflow and scheduling to maximize time. Standardize supplies and vendors, and limit high-cost pharmaceuticals. Inform physicians about the cost of the supplies they want, and purchase items in volume for discounts and cost reductions. Work with a limited number of vendors to collaborate more on pricing.

  3. Reduce overhead: Centralize, outsource and automate non-clinical functions like human resources, marketing, finance and purchasing, information technology, food services, labs and pharmacies, authors write.

  4. Create differentiation: Organize resources according to what populations the organization wants to serve, and decide what services to provide. Specialization is key, and time, money and resources must go to the services that differentiate the hospital or health system from neighboring competitors.

  5. Implement fundamental changes at facility level: Employ a unified regional strategy, even if it means a loss of decision-making autonomy for hospital and health system CEOs. Network-wide strategy will allow for maximize use of resources and will standardize changes across the system and eliminate redundancies.

"Lasting, high-impact change that meets the needs of all stakeholders depends not just on the focus, but also on the manner in which it is undertaken, which must be strategic, thoughtful, collaborative and deliberate," Kaul and Mohr write.

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