Hospitals, struggling to cut costs without compromising care, now have a way to uncover inefficiencies with a "waste index" that provides tips on how to save money, the Wall Street Journal reported.

The tool, developed by Premier, the healthcare purchasing intermediary, is designed for medium-sized hospitals. It features 15 efficiency measures that, if implemented, can help hospitals save money. The measures include cutting out unnecessary procedures, such as blood transfusions and laboratory tests, and improving workforce deployment.

The efficiency reports and index don't cost hospitals anything, the Journal reported, and hospitals that don't belong to the Premiere alliance can also use them to evaluate their performance. 

Hospitals that used the index saved $1.1 million a year on average in improved labor productivity, $869,784 in reduced readmissions, $613,632 in reduced lab testing and $147,018 by improving safety in the surgical suite, according to the article. 

It's often difficult for organizations to save on labor costs. A typical nurse earns a mid to high five-figure salary, but there are additional labor costs, such as productivity losses. The actual "cost" of a nurse is nearly double his or her base salary. But hospitals can cut costs by reviewing staffing needs and shifting employees between departments to accomodate higher demand and patient activity, according to the index.

Premier executives told the Journal they believe that hospitals that use the tool can save, per year, $1.8 million in overtime, $1.7 million in lab testing and $1.4 million in diagnostic imaging testing, among other categories. Increased productivity can save another $5.1 million.  

Using the waste index, University Hospitals, the Ohio-based not-for-profit hospital chain, cut $135 million over the past two years in labor costs at its 14 inpatient facilities, using a core of full-time employees and a pool of part-timers, with demand adjusted for flu season and other anticipated events, according to the article. 

To learn more:
- read the Wall Street Journal article