To fight declining reimbursement rates and patient revenues, hospitals and health systems are increasingly searching for ways to "trim the fat" from their organizations. However, are there really ways to successfully cut costs without affecting a hospital's ability to provide care and service patients in their respective communities?
Chris Bergman, CFO of Dayton (Ohio) Children's Hospital; Ylone Xavier, senior business adviser of enterprise intelligence at Change Healthcare; and Jim Porter, CFO of Chicago-based St. Bernard Hospital and Health Care Center, discussed the issue during a Nov. 15 panel at the Becker's Hospital Review 6th Annual CEO + CFO Roundtable, which took place from Nov. 13-15 in Chicago.
Here are four thoughts the panelists had on how healthcare organizations can eliminate costs.
1. "I truly believe [cost saving begins with] physician utilization. … Since I became a consultant about four or five years ago, I was really surprised ... no one shares [cost-saving strategies] with physicians, and that really shocked me," said Ms. Xavier. "I believe it's because of the … 'them versus us' mentality … people were afraid to work with physicians."
2. "Time equals money. Our hidden cost is time. It begins at the beginning of the day when there's a late start on the first case of the day, and it just compounds from there. Sure, it can be dissatisfying for physicians, but in the operating room, time is money. … We don't always see that, and we don't always necessarily look at that as a cost, but we've expanded that saying across the organization. … Time may not be money, but it is an opportunity for additional revenue," Mr. Porter said.
3. "[Technology helps] to identify the areas that you really need to be working on," Ms. Xavier said, adding that once key stakeholders can understand and identify where those costs come from, they can begin to more thoroughly analyze their service lines and other aspects of the organization to determine where additional cuts can be made. "For example, at the health system I previously worked at … we used that data to show … all the [executives] step by step how the emergency room was [the hospital's] biggest moneymaker."
4. "A lot of the burden falls on the CFO to be able to communicate … that it's not just about cost or making money, it's about future sustainability of the organization. It's about creating long-term financial plans. … Most CFOs are accused of being the 'chicken littles,' [always saying] revenue's getting cut. … [But] it requires a lot of communication to get everybody to understand why costs are really important," Mr. Bergman said. "It can't be about the finance guy controlling costs; the leadership team has to be on board. Everybody has to own it."