Execs Grapple with Healthcare Cost Problem
The HealthLeaders Media model is to combine research and conversations with healthcare leaders on the issues they face today. One of their biggest concerns is costs—how to get a handle on them, how to cut costs, and how to keep them down permanently.
In our newly released Industry Survey, available for free download on our website, healthcare executives tell us that cost reduction and process improvement is their number-three concern (ticked by 45% of the 823 qualified respondents), not far behind patient experience and satisfaction (54%) and clinical quality (48%).
So how much cost reduction are we talking about? Many healthcare organizations have a long way to go, according to the October 2012 HealthLeaders Media Intelligence Report on cost containment.
While 20% of healthcare leaders responding to the survey said their organizations needed to reduce operating costs by only 1%-3% beyond previous reduction efforts, 29% said that 4%-5% more costs had to come out, 26% said 6%-10%, 14% said 11%-20%, and 9% said they needed to cut more than 20% of operating costs!
That's a tall order, and the coming changes in healthcare won't make it easy. One of our Industry Survey advisors, Dennis Vonderfecht, president and CEO of Mountain States Health Alliance, a 13-hospital system based in Johnson City, TN, told us, "Our concern is, can we reduce our costs fast enough, as fast as reimbursements are coming down and as fast as volumes are coming down, and still have a positive bottom line."
Last fall, HealthLeaders gathered 30 hospital and health system finance leaders for our second-annual CFO Exchange, held at Kiawah Island, SC. In one of the breakout sessions, these CFOs shared their approaches for "Leading from Your True Costs, and Driving Them Out." You can read an edited transcript and view video clips of the comments of nine CFOs in our latest Impact Analysis report available as a free download.