5 Painless Ways to Cut Hospital Costs

Here are five simple ways hospitals can trim spending.

1. Keep an eye on those portions. Six Iowa Health System hospitals partnered with a food waste tracking company in Jan. 2008. They tracked untouched food before throwing it away and then adjusted their production practices accordingly. Since adopting the program, two of the six hospitals have cut their food waste in half — a large source of savings both financially and environmentally.

2. Encourage employees to be vocal. Employees may encounter wasted spending, time and energy on a daily basis that hospital executives just don't see. "Many front-line workers see waste everyday that could be eliminated, but they go on living with it because they are waiting for 'upper management' to address the issue. Why wait?  Begin to ask how to reduce waste," said Dan Woods, senior vice president of Verras Consulting.

3. Cut back on pricey meeting perks. Mayo Clinic researchers found free food at hospital department meetings may have no effect on faculty attendance. By canceling catering and food services for one year of meetings, Mayo Clinic was able to save more than $92,000.

4. Renegotiate shipping rates. South Nassau Communities Hospital in Oceanside, N.Y., saved $75,000 annually by lowering its shipping rates through renegotiation. Since shipping costs are typically hidden in a hospital's general ledger, it may not be very apparent how much money goes towards this function. Of the $500,000 in shipping costs at South Nassau, $300,000 was related to operating room supplies. Reducing overnight OR shipping can trim further costs.

5. Provide wellness incentives for employees. It's a long-term savings opportunity, but wellness programs can help ease the sting of a huge cost to any employer — healthcare costs are now the third-largest expenditure for companies today. Accountability-based wellness programs can deliver savings, as can an incentivized payment structure for employees' physicians. Walt Disney, American Express and other companies pay physicians bonuses for reducing the health risks of their employees.

Related Articles on Cost-Cutting Measures:

Hospitals Becoming More Creative in Cost-Cutting Measures
Study: Bundling Payments to Cut Costs Difficult to Achieve
Cutting Costs in an Age of Expense: 5 Thoughts From MemorialCare Health System CEO Barry Arbuckle


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