Hospitals tightening up on labor, service costs

Under intense pressure to lower costs, hospitals are being forced to trim labor and service expenses as a means of survival. While layoffs get most of the press, hospitals aren't just pink-slipping employees, according to one consultant.

For one thing, hospitals are instituting hiring freezes. They're also conducting labor productivity analyses to make sure that, say, their nurse staffing stacks up well against what their peers are spending.

Hospitals are also looking at management salaries, particularly managers that don't have direct contact with patients, according to Paul Osborne, managing director of Huron Consulting Group.

In cases where health systems have acquired new facilities, many administrators are changing the way they operate new properties, Osborne says. If the new property's operating costs are growing more than the system's patient volume, they're likely to cut jobs there, he suggests.

Hospitals are also taking a look at outsourced services, such as food and environmental management, to see if bringing them in-house will lower costs. Meanwhile, administrators are taking hard looks at clinical service lines and axing those that don't show a profit.

To learn more about these strategies:
- read this Healthcare Finance News piece

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