When it comes to effective cost management for hospitals, many top-level managers focus on the wrong issues.
That's the opinion of Navigant Healthcare Managing Director Bruce Hallowell. In a recent interview with RevCycleIntelligence, he noted that too many hospitals and healthcare systems overlook where there is management duplication.
"Everybody merged together and bought lots of hospitals. It's a duplication of leadership. We have systems with five hospitals within 10 miles of each other. The issue is that they're not really a system, but a configuration of different hospitals," Halowell said. "You can go to a system and find out they have 10 people at 10 different hospitals as the director of OR and they're not dealing with the cost, the consolidation or that next level of integration. Variation is caused by management and causes cost. If I have four different managers doing the same function, I'm going to get it four different ways."
Some other industry experts have also concluded that hospital mergers drive up costs, primarily because the merged entity charges more for the services rendered.
Along with not eliminating duplications of efforts, Hallowell concluded that too many hospitals and healthcare systems focus on costs, but not outcomes. "Cost relationship to length of stay is not always a good measurement. It's cost per day as the measurement. It's that disconnect of not understanding that although everybody is equal from a patient care standpoint, not everybody is equal from a reimbursement standpoint," he said.
Navigant issued a report last month warning that hospitals would have to remain focused on expense reduction, particularly in light of declining margins and increased utilization.
Hallowell also warned that hospitals need to keep any eye on the transition to ICD-10, which he said is the equivalent of "changing the wheels on the car going 100 miles an hour," because it will have a large impact on the processes of delivering care, and "a direct impact on reimbursement and that's where my cash and investment comes from, that's where I pay my employees."
To learn more:
- read the RevCycleIntelligence article