Attempts by hospitals and health systems to lower costs and improve care often backfire.
Harvard Professor Robert Kaplan, PhD, and Derek Haas, CEO of Cambridge, Mass.-based tech company Avant-garde Health, are conducting field research in more than 50 healthcare organizations to find better ways to cut costs.
Here are five common cost-cutting mistakes Dr. Kaplan and Mr. Haas identified, presented by Harvard Business Review.
1. Targeting nonclinical staff for layoffs. Administrative personnel and support staff are usually the first positions to go to preserve the quality of care, but the authors argue this may not be the best strategy because it can increase paperwork for physicians and ultimately reduce time with patients.
2. Not investing in enough space or equipment. Idle equipment is less expensive than idle providers, the authors write. Investing in extra space and equipment will likely be cost-effective in the long run.
3. Focusing on supplier discounts. Often, leadership tries to reduce the cost of materials and services from outside suppliers by negotiating higher discounts and joining a GPO. However, the authors suggest focusing on individual clinician consumption of supplies, which can fluctuate wildly.
4. Maximizing appointment schedules. Some health systems try to limit patient visits to 15 minutes or half an hour, but this may actually reduce productivity, according to Dr. Kaplan and Mr. Haas. In their research, many physicians have reported more time spent with fewer patients may actually improve outcomes and ultimately reduce costs.
5. Not establishing standards and benchmarks. The cost of implants serves as a good example: While processes are unregulated, costs vary greatly. The authors recommend analyzing the full cycle of care for each condition to determine the lowest cost mix of providers, materials and equipment.
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