Financial leaders can identify where and how to trim budgets, but it's up to CEOs to get buy-in from an organization's leadership and staff, and to address the cultural, quality, and staffing concerns associated with deep cuts.
As the healthcare industry moves toward value-based reimbursement models, it is becoming increasingly important for hospitals and health systems to find ways to trim as much waste as possible from the cost of doing business.
This reality is reflected in a recent survey from Strata Decision Technology—a Chicago-based healthcare IT company—in which 88% of respondents said their organizations have established cost-reduction targets.
But, while the overwhelming majority of provider organizations are trying to cut cost, according to the survey, not many are achieving their objectives: Only 17% of respondents rated their organization as successful, and 69% said they are just somewhat successful in reaching their goals.
Among the key reasons cited for this shortfall are difficulty tracking results (55%); lack of accountability (44%); inconsistent focus from senior leaders (30%), and lack of clinician engagement (29%).
Finding New Efficiencies
One of the organizations that participated in the survey is Mission Health System, a six-hospital system based in Asheville, NC.
"We started our budget process several weeks ago and determined we have a $52 million need for improvement for the system, and I would say the majority of that is to come through cost reduction rather than enhanced revenue," says Larry Hill, Mission's vice president of finance. "This is the target we need to get to over the next three years to keep our margin at what I would call a healthy system margin."
Rene Letourneau is a contributing writer at HealthLeaders Media.