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Analysis

Most Hospitals See Opportunity to Reduce Corporate Service Costs, Maintain Quality

By Jack O'Brien  
   March 13, 2020

Over a third of provider executives believe they could reduce corporate services by more than 10% without affecting quality.

Three-quarters of provider executives believe they could reduce corporate services without impacting quality, according to a Navigant analysis released Thursday.

Over a third of provider executives believe they could reduce corporate services by more than 10% without affecting quality.

The primary target areas for reducing corporate services are revenue cycle management, supply chain, and information technology, according to the study.

Additionally, provider executives see opportunities to leverage robotic process automation (RPA) and enterprise resource planning (ERP) to "reduce costs and improve accuracy."

Though oinly one-third of providers currently have deployed an ERP system, over half of the respondents in the study indicated that they plan to deploy or optimize an ERP by 2022.

Robert Green, a partner at Guidehouse, Navigant's parent company, told HealthLeaders that while the study's findings may not surprise most provider executives, the results are "very reaffirming."  

"I think a key takeaway is that [healthcare executives] are in the nascent stage of adopting automation and RPA," Green said. "In the next two months, I'll be having meetings with CFOs who are interested in understanding how RPA can assist in the back office functions driving more efficient, and frankly more effective, service models."

The decision to focus on targeted reductions in corporate services resulted in major savings for St. Peter's Health, a 99-bed acute care hospital based in Helena, Montana.

In 2017, St. Peter's engaged Navigant for assistance on performance improvement in nine areas of operation and recouped $14.7 million in the first two months before expanding the partnership, which resulted in total savings of $25.5 million.

Shelly Harkins, MD, MHA, chief medical officer at St. Peter's Health, told HealthLeaders the organization recognized that it needed to make incremental but sustained changes that deliver savings.

"Mine your nickels and you'll find your dollars," Harkins said. [Executives] can certainly look at the bigger things like when you implant a vendor contract or [resolve] an issue with billing. [Executives] can certainly wipe off a big chunk, but it's typically not sustainable because it's nickel and dime things that ultimately pile up on you."

Harkins continued: "[Executives] do have to be thorough, look deep, and not just discard or discount anything because it seems relatively small. I think we have had sustainable success on those smaller $25,000 to $30,000-a-year ideas, rather than the million dollar projects."

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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