Kaiser, Providence, Ascension leaders share cost-cutting strategies

Cutting costs in healthcare organizations often requires standardization and collaboration, tasks that are far easier said than done at large systems such as Kaiser Permanente, Providence Health & Services or Ascension Health.

"My takeaway would be that this is just really, really, really hard," Tony Byram, vice president of business intelligence at District of Columbia-based Ascension, said during a panel discussion at the Oracle Industry Connect conference at the Washington Hilton on Thursday. "It's hard sometimes to help our leaders in my organization understand how hard it is."

However, health systems can only streamline their businesses by making some sacrifices, said Kerri-Lynn Morris, executive director of finance operations and strategic projects for Menlo Park, California-based Kaiser Permanente. Her organization has about 60 different scheduling systems and nine different payrolls, numbers that represent obvious opportunities for cost-cutting standardization.

"We're a large business and we've got to get to the point where we say, 'OK, pick one--we can live with one,'" she said. "It's great to have regional autonomy, but there also has to be compromise and recognition of the cost that it brings when one region wants one app and another region wants something else."

In a session at the Oracle conference Wednesday, Texas Medical Center CEO Robert Robbins also stressed the challenges of bringing disparate institutions to the table, while noting how critical such a task has become. "The future is going to be collaborative efforts," he said.

Christine Santos, chief of strategic business analytics for Providence Health & Services, a nonprofit system headquartered in Renton, Washington, said her organization views cutting costs as a secondary concern. Its goal is to make its communities healthier first, and "then the cost piece comes naturally," she said.

Still, Providence seeks to consolidate its IT, supply chain and finances in order to reduce administrative costs so it can put more dollars toward patient care and achieving the Triple Aim, Santos said, adding, "It's no longer a finance initiative; it's really an administrative initiative."

At Kaiser, Morris said, the organization wants to reduce employee overtime by 5 percent as well as look at other ways it can reduce workforce-related overhead, an initiative she acknowledged can sometimes be a difficult sell.

"The key for us is this is not something we are doing to our employees or to our managers, it is something we're doing for them," she said.

Ascension has started several initiatives of its own, Byram said, including a value-creation office to cut costs, information governance to set standards for the normalization of data across the organization and a shared-service division to "manage all the back-office stuff." The organization also has pulled all of its physicians into its clinical holdings organization with one set of leadership and one revenue cycle system. It's a strategy that frees up doctors to focus on their jobs, Byram said.

"Physicians, they didn't get into this to run a business, they came into it to help patients. And they ended up having to do all of this other stuff. Well, if we can take that burden off of them, that will help," he said.

But a successful cost-reduction strategy will look different for every health system, Santos stressed, so leaders must endeavor to find what works best for them.

"To me there is no secret sauce," she said. "You have to do what's right for your organization, find that right balance to help move change forward."