Four ways to achieve sustainable financial margins

15 April 2014 | Clifford Goldsmith, MD, Managing Director, US Healthcare Providers

Moving forward, cost-cutting measures alone won’t be enough for health organizations to survive the increasingly relentless financial challenges they face. Consider just a couple of the startling statistics: Healthcare organizations in the US can expect a 15 to 25 percent decrease in revenues over the next 10 years, according to Booz & Company. At the same time, typical providers in the United States can expect expenses to grow roughly 5 percent annually over the next decade if left unchecked, according to The Advisory Board Company.

So how can you shift your health organization’s economic trajectory to one that’s more sustainable? It will require taking a broader approach to margin management. To help you protect your future margins, here are four areas to focus on according to The Advisory Board Company:

Cost growth reduction: Find ways to reduce the growth rate of your costs. For example, one of the biggest expenses for health organizations is staff turnover. If you can increase your employee retention rate, you can reduce how much you spend each year on recruiting, hiring, and training new employees. Find ways to improve job satisfaction for your people.  At Palmetto Health, pen-enabled Windows 8 tablets improved physician satisfaction by reducing their device count from 4 to 2.  Instead of swiveling between multi-user workstations, a laptop, a tablet and phone, physicians can get 100% of their work done anywhere and anytime with just a Surface Pro 2 and a phone.  Instead of staying late in the office to finish their documentation, they were able to go home after seeing their last patient of the day. Another way to increase job satisfaction and improve retention is through programs that recognize and motivate staff, such as the clinical recognition program at Massachusetts General Hospital.

At UPMC, physicians are using their Cerner and Epic EHRs while mobile using Microsoft Windows 8 devices. They are further increasing their productivity and efficiency with streamlined Modern UI Apps. This adds up to significant cost and time savings and improves both physician and patient satisfaction. You can see more in the video below.

Enhanced revenue capture: To increase your revenue, you’ll want to do everything you can to keep your existing patients and increase referrals of new patients. That means not only continually improving the quality of your services, but also providing a great patient experience to build loyalty. Offer convenient ways for patients to communicate with your organization such as being able to make appointments online.  Equip your clinicians with tools to help them quickly and easily access patient information, so they can provide better patient care. UPMC, an integrated delivery network in Pittsburgh, is doing just that with its mobile, single-sign-on platform that it developed with Caradigm.

Capacity management: How can you provide better care to more people with your already stretched resources? Transforming processes with technology can help increase efficiency. Case in point: Texas Children’s Hospital finds and resolves bottlenecks in patient flow using analytics. As a result, the hospital has reduced delays by up to 51 percent, shaving a full day off the typical hospital stay and making it possible for the hospital to see as many more patients in a year as it could if it had added and staffed another hospital floor. Another way to propel productivity is to provide your staff with easy-to-use communication and collaboration tools they can use in conjunction with your electronic medical record system (EMR).

Case mix management: Find new and efficient ways to improve the health of your population, prevent those at risk from getting sick and keep the sick from getter sicker in order to better manage your case mix and financial margins. Tools for patient relationship management can help. Use automated workflows to follow up with patients after they’ve left your clinic or hospital to help them stay on track with their care plan. These tools can also help you proactively engage people in the community with education efforts and targeted outreach for your services. Likewise, technologies that help care teams communicate and collaborate from anywhere can improve case coordination and chronic-condition management. And analytics tools such as Predixion’s cloud-based predictable readmissions solutions can help reduce readmissions.

The economic realities in healthcare may look harsh, but the good news is that today’s technologies offer many ways to help you reframe your financial picture for a sustainable future.  The key is to start by insisting that your EHR run on a mobile computing platform which will immediately improve productivity.  Then add application technologies that extend your productivity and teamwork around the EHR such as unified communications, collaboration for care teams, workflow and relationship management and analytics that works with your healthcare populations.  I’ll dedicate one of my next blogs to technologies which further teamwork.

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Clifford Goldsmith, MD
Managing Director, US Healthcare Providers