5 Cost Reduction Priorities for CEOs
"The thing we are struggling with at its core is the constant culture change of cost reduction. We've been very successful in some ways with cutting costs in the last several years, but I have people coming to me saying 'I did my share.' Other industries don't do that because they see the value in constantly picking away at cost. Vendors maintain their 20% margin because they are constantly looking at ways to reduce cost… We have to get to where people value cost reduction as part of what they do every day, whether it is on the doc side or the administrative side," Cawley says.
"There is no easy fix here," agrees John Popovich, Jr. MD, president and CEO at Henry Ford Hospital in Detroit. "It's a process. It starts with giving them the data and showing them the variability and working through it. … It's more about the process and the relationships and the data, all of that stuff has to go together. It's a secret sauce."
Developing Trustworthy Data
As Popovich notes, data is crucial to demonstrating the best areas for opportunities to reduce costs, and most CEOs echo the sentiment.
"It's going to require a deep investment in analytics," Cawley says of achieving ongoing cost reductions.
CEOs know physicians can be moved to change their behaviors when presented with data, but only if it is data they trust.
Doug Luckett, interim CEO at CaroMont Regional Medical Center and CaroMont Health in Gastonia, NC, says having accurate, trustworthy data to share with clinicians in conversations around cutting costs is his "top priority."
"I want to make sure we have a single version of the truth in terms of data integrity when we talk to our physicians about cost reduction," he says.
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