Reducing expenses continues to be a top priority for hospitals and health systems, and there are several untapped performance areas where hospitals can find millions in cost savings, according to a whitepaper from Huron Healthcare.
Huron consultants and analysts found that if hospitals and health systems honed in on 10 commonly overlooked areas to improve operational and clinical performance, they could save between 14 percent and 26 percent of total expenses. Of course, implementing changes in each of the following 10 areas can vary in terms of difficulty, but hospital CEOs and CFOs can at least use these opportunities as a starting point on where they could improve their organization.
Note: The typical expense and dollar improvement estimates are based on a 350-bed hospital with $365 million in net patient revenue.
1. HR benefits. This includes medical, dental, vision, long- and short-term disability. Improving benefit spend by 6 to 8 percent could save $2.2 million to $3 million.
2. Purchased services. This includes services mostly outside the scope of group purchasing organizations, such as IT equipment and banking services. Improving purchased services spend by 5 to 15 percent could save $1 million to $2 million.
3. Staffing to demand. This includes flexible staffing for nursing, operating rooms, emergency departments and other areas. Improving labor costs by 5 to 8 percent could save $10 million to $16 million.
4. Front-end revenue cycle. This includes point-of-service collections, insurance verification, financial counseling and healthcare access. Improving revenue cycle issues by 2 to 4 percent could save $7.5 million to $15 million.
5. 340B drug program. Carefully managing and maximizing the 340B drug benefit program discount could save $1 million to $2 million.
6. Linen supply costs. Improving linen spend by 5 to 20 percent could save $75,000 to $300,000.
7. Physician offices. This includes improving the tools and metrics to bolster ambulatory throughput. A 5 percent improvement in this area could save $3 million for multispecialty physician groups with 100 to 150 providers.
8. Clinical operations efficiency. This includes case management, care coordination, patient placement, bed turnaround and patient transportation. Improving clinical operations by 5 to 10 percent could save 2 to 4 percent of a hospital's net revenue.
9. Reprocessing of single-use devices. Improving single-use clinical device costs by 15 to 40 percent could save $175,000 to $315,000.
10. Blood management. This includes how and when blood is used as well as blood-specific products. Improving blood management costs by 10 to 20 percent could save $200,000 to $500,000.
To read the entire whitepaper from Huron, click here.
Huron consultants and analysts found that if hospitals and health systems honed in on 10 commonly overlooked areas to improve operational and clinical performance, they could save between 14 percent and 26 percent of total expenses. Of course, implementing changes in each of the following 10 areas can vary in terms of difficulty, but hospital CEOs and CFOs can at least use these opportunities as a starting point on where they could improve their organization.
Note: The typical expense and dollar improvement estimates are based on a 350-bed hospital with $365 million in net patient revenue.
1. HR benefits. This includes medical, dental, vision, long- and short-term disability. Improving benefit spend by 6 to 8 percent could save $2.2 million to $3 million.
2. Purchased services. This includes services mostly outside the scope of group purchasing organizations, such as IT equipment and banking services. Improving purchased services spend by 5 to 15 percent could save $1 million to $2 million.
3. Staffing to demand. This includes flexible staffing for nursing, operating rooms, emergency departments and other areas. Improving labor costs by 5 to 8 percent could save $10 million to $16 million.
4. Front-end revenue cycle. This includes point-of-service collections, insurance verification, financial counseling and healthcare access. Improving revenue cycle issues by 2 to 4 percent could save $7.5 million to $15 million.
5. 340B drug program. Carefully managing and maximizing the 340B drug benefit program discount could save $1 million to $2 million.
6. Linen supply costs. Improving linen spend by 5 to 20 percent could save $75,000 to $300,000.
7. Physician offices. This includes improving the tools and metrics to bolster ambulatory throughput. A 5 percent improvement in this area could save $3 million for multispecialty physician groups with 100 to 150 providers.
8. Clinical operations efficiency. This includes case management, care coordination, patient placement, bed turnaround and patient transportation. Improving clinical operations by 5 to 10 percent could save 2 to 4 percent of a hospital's net revenue.
9. Reprocessing of single-use devices. Improving single-use clinical device costs by 15 to 40 percent could save $175,000 to $315,000.
10. Blood management. This includes how and when blood is used as well as blood-specific products. Improving blood management costs by 10 to 20 percent could save $200,000 to $500,000.
To read the entire whitepaper from Huron, click here.
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