In a survey of 146 U.S. C-suite hospital executives, reducing costs rose to the top of corporate concerns, the Advisory Board Company found. Nearly two-thirds (62%) of respondents said they were concerned about preparing their organization for sustainable cost control, while 56% cited innovative approaches to expense reduction.
Following costs, executives were concerned about exploring diversified, innovative revenue streams (56%), boosting outpatient procedural market share (50%) and meeting rising consumer demands for services (50%).
Meeting consumer demands jumped to the fifth spot this year from 10th in 2017, reflecting growing emphasis on patient engagement and the patient experience. None of the top five concerns from 2016 make this year’s top five list.
Given the 5,534 registered hospitals recognized by the American Hospital Association, the survey sample is small. Still, it reflects the deepening financial strains hospitals face with rising labor and supply costs, lower volumes and cuts to reimbursement.
Expense reduction overtook expanding outpatient access, which was last year’s top concern and remains a major focus as more care delivery shifts to urgent care and ambulatory medical centers.
“Health system CEOs recognize that any effective growth or financial sustainability strategy must be built on competitive cost structure in order for their enterprises to deliver high-quality, cost-effective care to the patients they serve,” Christopher Kerns, executive director for research at Advisory Board, said in a statement. “The entrance of nontraditional health care providers, such as retailers and consumer-focused imaging and surgery centers, adds to the urgency of health systems improving cost structures, sometimes radically so, such as redesigning staffing models, rationalizing services lines across their market, and even transforming their facility footprint.”
Reducing costs can be complicated in healthcare. Costs of labor and medical supplies are rising. There’s uncertainty about the Affordable Care Act and value-based payment structures as well as uncertainty about future revenue growth. Last year, Tenet Healthcare announced it would cut 1,300 jobs to bridge a budget gap, while Lahey Health said it would lay off 75 employees.
To help improve efficiency and reduce uncertainty, many hospitals are automating their supply chains to increase visibility, improve forecasting and reduce costs across the enterprise. This is especially a concern as organizations move to value-based models.
Revenue cycle management is another key focus in maintaining cost controls over time. To that end, analytics and EHRs can serve as tools to identify where clinical variation exists and target savings.