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How Yale-New Haven Health System Cut Spending by Millions

By Christopher Cheney  
   October 06, 2016

Largely through consolidation of clinical services and achieving economies of scale linked to the Saint Raphael acquisition, YNHHS was able to achieve a one-time cost-savings of about $200 million from the acquisition deal, Allegretto said. According to Richard D'Aquila, executive vice president of YNHHS and president of Yale-New Haven Hospital, regulatory commitments helped drive the consolidation strategy, he told a symposium audience. "There was one hospital, one provider number, one model for clinical services."

Sustainable Cost-Cutting Initiatives
YNHHS was able to additionally reduce spending by about $150 million from 2012 to 2015, and the figure was a focal point at the symposium.

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The organization had set a target for $125 million in cost savings over the four-year period, primarily in four categories:

  1. Human resources
  2. Clinical redesign
  3. Non-labor
  4. Labor

"We beat our target, and it is sustainable," Abe Lopman, senior vice president of operations at YNHHS, told an audience at the event.

Patient care accounts for about 83% of the health system's annual spending, so cost savings from clinical redesign were the biggest slice targeted for spending reductions, at $60.8 million. Actual costs savings from clinical redesign were $33.4 million, but the shortfall was not surprising, Lopman said. "This is something that has to be part of your culture. It takes time to do it. Over time, we expect it to be better."

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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