How to Break Even on Medicare Reimbursements
1. Adopt Process Efficiency. If you want to be profitable, you have no choice but to get a grip on your processes. Doing so goes beyond looking at your supply change and understanding expense management and Lean and Six Sigma process improvement programs.
“We find with hospitals that there’s a real desire to focus on supplies [to cut costs] because there’s always something there and it’s relatively easy pickings,” said Gift. “When you do expense management, you dig into labor, supplies, discretionary expenses, and everything else. You make incremental improvements on cost and cost structure by improving your labor and efficiency.”
While many organizations have added process improvement initiatives to select areas, for instance looking at their back office or nurse scheduling, for the most part Lean and Six Sigma remains confined to those areas.
The American Society for Quality conducted a study of 77 hospitals and found that 53% of hospitals have some type of Lean initiative and 42% are using Six Sigma. However, the same study reported that only 4% of hospitals have full deployment of Lean. A full-scale roll-out of this type of process improvement program may be in order, if you haven’t considered it.
Healthcare facilities that have successfully employed Lean and Six Sigma initiatives, such as Virginia Mason Medical Center and St. Vincent Mercy Medical Center, collectively agree that in order for process improvement initiatives to be fully effective they must be driven by a unified team mindset in all departments—everyone has to believe and act Lean. Unfortunately the study found that 30% of hospitals are still lacking leadership buy-in, while 59% are lacking resources to pursue such an effort. For a more in depth look at Lean and Six Sigma, watch for the April issue of HealthLeaders Magazine.
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