Skip to main content

4 Crucial Tactics for Reining in Healthcare Cost

 |  By Rene Letourneau  
   August 25, 2014

How can you achieve the deep, sustainable cost reductions required for success in the new era of healthcare? Here are four keys: collect and mine data to alter clinician behavior, reduce variations in care, foster strong physician leadership, and lead by example.

For hospitals and health systems to achieve the kind of deep, sustainable cost reductions that will be required for success in the new era of healthcare, they must collect and mine data to alter clinician behavior, use evidence-based medicine to reduce variations in care, foster strong physician leadership, and establish a senior administration that leads by example.

That was the consensus among the financial leaders who recently participated in three roundtable sessions I moderated on protecting the bottom line at HealthLeaders Media's fourth annual CFO Exchange in San Diego.

Harnessing the data

To create a clinical enterprise built on evidence-based medicine, health systems need to provide data to physicians, says Jerry Arndt, senior vice president at Gundersen Health System, based in La Crosse, WI.


CFO Exchange: Top Hospital Revenue Growth Opportunities ID'd

CFO Exchange: Smartphones Poised to Disrupt Healthcare, Says Topol

CFO Exchange: Healthcare Leaders Share 5 Innovative Ideas


"I think at the heart of this whole question is good data and transparency. The variation that exists around utilization and practice protocols is amazing. To understand why that variation is what it is, you have to have the data, and you have to be willing to talk about it at the individual doctor level," he says.

From his experience, physicians are eager to have data to support their clinical decision-making and are willing to engage in discussions about how to use data to make appropriate changes to their practices.

"We are at the point where some of the users of the data are starting to pull for the data," he says. "They are actually asking for … the information. You get it out there, and it at least triggers some conversation."

Physicians generally respond well to trustworthy data, agrees Dale Maxwell, senior vice president and chief financial officer at Albuquerque, NM-based Presbyterian Healthcare Services. "We have found that physician adoption is relatively quick as long as you can back up the protocol with research and science showing a better outcome for the patient."

WEBCAST: The Cleveland Clinic and CHI Models for Cardiovascular Excellence
Date: August 27 1:00-2:30pm ET—presentations and live Q&A Leaders from Cleveland Clinic and Catholic Health Initiatives reveal how they have successfully positioned their organizations’ cardiovascular service lines for growth through leadership training, partnerships, and better care coordination. >>>Register

"I've been amazed at what we've been able to do with clinical data," adds Charlie Hall, executive vice president and chief financial officer at Piedmont Healthcare in Atlanta. 

"My decision support department used to be eight people and now it's 20. From a CFO standpoint, I think if you are not spending money in this area right now, you really need to invest here because it is just phenomenal when you get a common database with proper support what you can get out of these systems."

Reducing clinical variation

"We feel it's very important to drive evidence-based protocols and are monitoring adherence to them," says Maxwell. "Our expectation is that these protocols will be followed, but we also know that we will experience normal variation in care with different patient situations."

"Lab services is a good example of how evidence-based protocols can drive better results," he adds. "By automating the physician order entry system, we have seen the number of lab tests, and therefore costs, decline. Additionally, we expect evidence-based protocols to improve quality scores throughout our system."

Cultivating physician leaders

Hall says running a successful provider organization depends heavily on having robust physician leadership.

"We've started what we call the Piedmont Leadership Academy, with a focus to train physicians in becoming physician executives," he says. "It's a nine-month curriculum with quarterly meetings of a couple days along with online assignments. We've found that physicians know the clinical side, but they've never really had any formal education on the business side. It's given us an opportunity to talk about data, cost accounting, managing people, and the challenges of managing cost. We are trying to groom them to eventually be executives within the organization."

Piedmont's leadership academy has gone a long way toward helping physicians understand why cost containment is so important and has also helped Hall see things from the clinical angle, he says.

"It's been an interesting approach and a different perspective in beginning to dig down into some of the issues around cost control, and it provides physicians with a new appreciation of financial data and cost accounting. On the other hand, I have gained an appreciation for clinical protocols, the difficulty in trying to design them, gaining consensus, and then incorporating them into our processes and tools."

Patrick McGuire, chief financial officer at St. John Providence Health System and the Michigan Ministries of Ascension Health, based in Warren, MI, says his organization has also rolled out an in-house program to train physician leaders.

"We have been trying to invest in leadership development for physicians each year now for the past couple of years. We have a cohort of physicians that we believe have the capability of taking a leadership role within the system, and we are putting them through a course over the span of a year where they are learning about a full range of financial and strategic issues facing healthcare to become well-rounded leaders."

Creating an integrated culture

Having physician leaders who champion clinical standardization and cost-cutting efforts is important for breaking down the silos that traditionally exist between the finance and clinical departments in many hospitals, says Ted Miller, vice president of finance and chief financial officer at Floyd Memorial Hospital in New Albany, IN.

"I think that having strong physician leaders is one of our biggest opportunities because as CFOs and leaders there is only so much that we can push. When we talk about sharing information, we really need all of the clinicians on the same page with us. … In so many organizations, I continue to see the silo mentality, and that is a huge obstacle for us to really achieve the opportunities that are out there."

Additionally, senior leaders must set the right example when it comes to building a workforce that is willing to adhere to cost-containment strategies, Miller says.

"If you want to know what the culture is of an organization, go observe the senior team, because everybody else looks exactly at what we say or what we don't say. The best way to change the culture is to make sure you have the senior team right and that you are all rowing in the same direction."

Rene Letourneau is a contributing writer at HealthLeaders Media.

Tagged Under:


Get the latest on healthcare leadership in your inbox.