Despite encouraging outlooks, cost reduction remains a top concern for healthcare executives. With shortages and burnout, organizations want remedies without further straining their workforce. After years of focus on gaining operational efficiencies, those opportunities have become fewer and far between.
Cost Reduction Strategies
Below, we identify five low-impact top cost reduction strategies that healthcare organizations are pursuing today:
- Employee Benefits. This has been an increasingly frequent source of double-digit savings across numerous categories. Considerations:
- Pharmacy benefit management (PBM) – managing net cost and transparency, with formulary flexibility; also, vendor-provided care management to reduce wasted resources and self-PBM models
- Other categories – managing general underwriters, broker-less models, claims audits, and reference-based pricing
- Clinical Variance Reduction. As focus shifts from cost per unit to resource improvement, investments in analytics increase. Approaches:
- Data-driven, collaborative methods reducing clinical variance waste and increase accountability without impacting care or workflows
- Service Line Analytics. Investing in analytics provides more holistic views on resource allocation. Strategies:
- Organizations using data to rationalize service lines, providers, and nonprofitable procedures
- Lean. Utilizing Lean concepts uncovering efficiencies in existing processes, with an emphasis on end-user-generated resources and rapid implementation cycles
- Vendor Management. Focusing on continual improvement of the procurement process continues to hold a strong return on investment. Examples:
- Innovation. Category managers with subject matter focus research innovations such as how generative artificial intelligence (AI) helps reduce costs for suppliers and aligning incentives to pass along efficiencies
- Blocking & Tackling. Competitive bidding every one to three years; quarterly vendor reporting that fuels key performance indicators (KPIs) and provides oversight on key vendor management metrics from service levels and contract compliance to trends and efficiency opportunities
Our team at Forvis Mazars has more than 30 years of experience in cost reduction in healthcare. While we’ve seen the types of strategies ebb and flow over time, the total opportunity available has been consistent overall. The key to realization is the commitment to achieving necessary efficiencies and vigilance to continually identify approaches that work in an increasingly challenging environment. If you have questions or need assistance, please contact a professional at Forvis Mazars.