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Analysis

AANA CEO Discusses 4 Aspects That Affect Healthcare Cost Containment

By Jennifer Thew RN  
   April 05, 2019

Randy Moore shares his thoughts on areas in healthcare where CEOs struggle to control costs.

Even when change is exhilarating—like buying a house or starting a new job—it can also be fear-inducing. Take, for instance, the current state of the healthcare industry.

The shift from fee-for-service to value-based reimbursement, the steady pace of mergers and acquisitions, and the movement of care out of the hospital to alternative settings, are all issues that can cause even the most seasoned healthcare executive to lose sleep.

"From my perspective, the amount of change we're experiencing in healthcare right now is unprecedented," says Randy Moore, DNP, MBA, CRNA, CEO of the American Association of Nurse Anesthetists.

Moore says he understands how these factors can increase healthcare leaders' need to focus on cost control and containment. Before beginning his role at AANA in 2017, Moore managed a $35 million budget and more than 100 employees as the director of perioperative and anesthesia services at Passavant Area Hospital in Jacksonville, Illinois. 

"[In that role], I was acutely aware of the impact and the importance of cost control in the hospital and in the health system," he says. "One of the things that's been really interesting and fun about my [role as AANA CEO] is gaining that perspective at the hundred-thousand-foot level. I have the privilege of meeting and talking with people, whether they're CEOs or CNOs of hospitals or health systems or other organizations, and [through those conversations] one thing that is abundantly clear to me is that, without a doubt, every CEO in this country is trying to figure out how to control costs."

HealthLeaders recently spoke with Moore about various components of cost control and containment and his insights on this topic for healthcare leaders. Following is a lightly edited transcript of that conversation.
 

1. Care Moving to Alternative Settings
 

"One of the things I think is really starting to heat up is the movement of healthcare out of hospitals, which makes a lot of people nervous, whether you're a nurse that works in a hospital or you're a CEO running a hospital. If I was a [hospital] CEO seeing what's happening in terms of these companies that are trying to move surgical care out of hospitals, [it] would keep me up at night."

"If you would've told me 10 years ago that we'd be doing total knee replacements in an ambulatory surgery center, I would have said you were nuts. Now it's happening and it's happening in a big way. The reason why more and more healthcare is being moved out of the hospitals and into office-based settings and surgical centers is because it's just cheaper to do it there. The cost structure is much more favorable to do a surgical case in an ambulatory surgery center than it is to do in a hospital. That is causing significant pressure on hospitals because we know, typically, in hospitals there's two areas that serve as the economic engine—the emergency room and the operating room. When you start taking volume out of either, it causes hospitals and health systems significant financial difficulty. It is all about cost containment and trying to find the most cost-effective environment to provide that care."


2. Standardizing Care
 

"Expenses are essential and that has opened up opportunities for nursing and for advanced practice nursing to be a part of the solution in terms of value-based healthcare and the roles that they play. One of the things that is clear to me around expense control is [the need to] control variation in clinical care across the spectrum from a nurse who is in a critical care unit to a CRNA or [APRN] in a hospital or in an operating room."

"Variation in care typically has two major problems. One is that quality outcomes could be impacted, and two, the cost is frequently higher. So, I think more and more administrators, healthcare administrators are going to have a laser focus on variation of clinical care at the bedside and the operating room."

"One of the things we're starting to see proliferate in the anesthesia space is enhanced recovery after surgery. It's a program that is designed to layer in protocols so that a patient who's having, let's say a total knee replacement or other type of surgery, is receiving care that is consistent with established and well-known evidence-based interventions, starting preoperatively all the way through the spectrum of care. Enhanced recovery is intended to decrease the variation in clinical care and implement protocols and procedures that are demonstrated to provide better outcomes."  

"It seems almost counterintuitive at first because, frequently, enhanced-recovery-after-surgery programs cost a little bit more on the front end because you're using different drugs, and sometimes those drugs are more expensive. But on the back end, patients have fewer complications, so their hospital stays are shorter and surgical-site infections and postoperative pneumonias are lower. The investment in the front end results in significant cost savings on the back end."
 

3. Change Management
 

"The most difficult part [of standardizing care] is the change management piece. I'm a CRNA, and I know what it's like when someone tells you, 'Hey, we want you to do something different.' Your knee-jerk response is that you've been [practicing] a certain way for so long and your outcomes are spectacular—at least you think they are. [Change] is the most difficult thing because we, especially anesthesia providers, get into a groove and we like to do things a certain way. It's difficult to get outside of that comfort zone unless there's a compelling reason to do so. So, we need to look at the number of hours, the outcome data, and the expense savings that could be realized or have been realized in other programs [to make a change]."

 

4. Mergers and Acquisitions
 

"One of the things that we're seeing, and not just in the anesthesia space but across the board in healthcare, is related to merger and acquisition activity. I think the predominant driving force behind that is, as a health system or even as the anesthesia company, trying to control the cost structure. They know that they're trying to gain this economy of scale and get influence over payers and supply chain management. That really is driving a significant uptick in the merger and acquisition activity, and I think that will continue."

"We're seeing hospitals closing because they're unable to navigate in this environment where reimbursement's shrinking and cost control is imperative, and you're being asked to move to a completely different model. You're moving from fee-for-service to a value-based care and quality model. There are a lot of hospitals not able to survive in that structure."

"Not all of these mergers or acquisitions result in success, and we're now starting to see some of these health systems become huge and they're starting to close some of the facilities they've acquired—[there may be] cultural issues within the facilities or business issues or they're unable to control the expenses the way they thought they would."

"One of the things that we're seeing on the anesthesia side of the equation in merger and acquisition activity is anesthesiologists and CRNAs getting caught up in it and that's not always to their benefit. For example, if you were acquired by a large anesthesia company, they may come in and have a completely different philosophy about the way anesthesia should be delivered, the way it should be reimbursed, or the way they treat their employees."

Jennifer Thew, RN, is the senior nursing editor at HealthLeaders.


KEY TAKEAWAYS

The increased delivery of healthcare services in alternative settings can be a stressor for healthcare leaders.

Investments in the front end of standardizing clinical care could contribute to cost savings on the back end.

Mergers and acquisition activity among healthcare organizations and anesthesia companies are not always beneficial.


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