HFMA issues report on reconfiguring healthcare delivery's cost structure

The Healthcare Financial Management Association (HFMA) in a new report said that hospitals and healthcare systems should move beyond cost containment to cost configuration.

The 32-page report, which the HFMA released on the opening day of its annual national institute (ANI) in Orlando, Florida on Monday, suggested that hospitals devote more expenditures toward population health and risk management. It cited a variety of case studies from member hospitals and systems.

The ANI is usually the venue where the HFMA releases multiple reports and studies. At the 2013 event, it announced the creation of a price transparency task force, as well as draft guidelines outlining how providers should handle financial interactions with patients.

The report concluded such a change in perspective must be made in light of payment reductions from the Affordable Care Act (ACA), a restricted ability to cost-shift to private payers and the need to move to delivering value-based care. It made the following recommendations:

1. Since labor forces account for a vast percentage of expenses, organizations should make the workforce more efficient. The report cited Vanderbilt University Medical Center, which streamlined and merged management and administrative departments as well as positions.

2. Organizations should consider outsourcing services, or if they already outsource them, they should examine whether moving the services inhouse would lead to cost savings.

3. Standardize and streamline supply chain management. Banner Health in Arizona began utilizing a two-manifold exhaust system for most of its operating rooms that was far less expensive than the four-manifold units in use systemwide.

4. Revisit clinical workflow and make it more efficient.

5. Seek network partners for affiliations that can help launch shared cost-savings initiatives.

"Health systems must take a strategic approach to cost reduction today," said HFMA Chief Executive Officer Joseph J. Fifer in a statement. "The basic strategy is to reduce spending in established service areas to free up resources needed for new investments in value-based care. Those investments will deliver the most value to patients and other healthcare purchasers."

To learn more:
- read the HFMA report (.pdf)
- check out the announcement