By Alyssa Rapp, Surgical Solutions
Hospitals are grappling with tighter profit margins each year. In fact, according to data from Moody’s Investor Service cited by CNBC, the average hospital operating cash flow margin dropped to 8.1 percent in 2017 from 9.5 percent in 2016. As expenses outpace revenue, hospitals nationwide are seeking ways to cut costs without sacrificing their quality of care.
To address their declining margins, hospitals are increasingly investing in new technologies and finding creative staffing solutions that can maximize efficiency and lower operating costs.
For example, clinical decision support (CDS) systems that providers use to diagnose patients more quickly and accurately also have been shown to save money by reducing unnecessary testing. Automation software can significantly cut down on the amount of time, money, and labor required to complete administrative tasks. And opting for strategic outsourcing with specialty contractors to perform non-clinical tasks can save money and unburden hospital workers, giving them more time to focus on patient care.
Data As A Safety Net
CDS systems combine biomedical data, individuals’ medical histories, and computational analysis to help physicians make informed choices about the diagnosis and treatment of illnesses. Many of today’s CDS systems work with information derived from electronic health records (EHRs) and use data mining techniques to examine patients’ symptoms using relevant clinical research. According to the Office of the National Coordinator for Health IT, CDS systems are expected to “significantly impact improvements in quality, safety, efficiency, and effectiveness of healthcare.”
In addition to helping doctors diagnose patients faster and more accurately, CDS tools also can alert providers to dangerous drug interactions. CDS systems also have been shown to reduce redundant or unnecessary medical testing, which can delay or hinder treatment and result in insurance claims denials. When equipped with artificial intelligence capabilities, CDS systems can scan the latest research regarding a particular medical condition and guide doctors toward the best-known methods for testing and treating patients with specific symptoms.
These systems also can help patients to take steps toward preventative care. For example, if patients are determined to be at risk for developing cardiovascular disease, a hospital’s CDS system can send them reminders through its patient portal that it’s time to schedule blood pressure and cholesterol screenings.
CDS systems not only help providers deliver better care—they also can increase a hospital’s operational efficiency by helping overloaded providers interpret ever-growing volumes of patient and clinical data and even protect patients from dangerous medical errors. One study published by the NIH found that CDS systems can reduce the risk of malpractice by more than half.
Eliminating The Grunt Work
Hospitals spend an alarming amount of money each year on administrative work, much of which can—and should—be automated. A study published in Health Affairs, revealed that administrative costs account for about 25 percent of hospital expenditures in the United States.
One way that hospitals can automate administrative processes without investing in brand new systems is by enhancing their current systems with robotic process automation (RPA). These software bots are trained to perform quickly and accurately much of the repetitive work associated with billing, ordering medications, and admitting patients, freeing up hospital staff to focus on more complex responsibilities that require face-to-face communication and specialized training.
The vast majority of healthcare facilities still handle insurance claim denials manually. This is not only time-consuming but also increases the chances of costly administrative errors and delays. Many of the tasks associated with billing and insurance can now be automated, and the cost-saving benefits are well documented. According to Ernst & Young, automation can reduce turnaround times for insurance claims by as much as 85 percent.
Running A Tight Ship On A Tighter Budget
With an aging population, the need for healthcare professionals has never been greater. The American Hospital Association reported there were 750 million doctor’s visits in 2016, up from 380 million in 1994. There are simply not enough providers to handle adequately the current influx of patients needing care, and this problem is expected to grow. The projected shortage of physicians and nurses means it will be more and more difficult for hospitals to find qualified staff. Staff shortages contribute not only to burnout among hospital workers, but they also make it more expensive for hospitals to attract new hires and retain current employees.
One way that hospitals can increase staffing budgets and retain workers with clinical expertise is by reducing their overhead costs. According to Health Affairs, administrative costs in the U.S. alone account for about a quarter of total hospital expenditures. Outsourcing non-clinical work such as financial services, IT, and equipment maintenance is one way to reduce overhead costs and ease the burden on full-time workers. As the CEO of Surgical Solutions, I have seen hospitals not only save money outsourcing highly specialized tasks in the operating room environment, but I’ve also seen them benefit from the ability to scale services up or down depending on the volume of patients.
Clearly, America’s healthcare system is due for an upgrade. Modernized approaches to patient diagnostics, automated billing and claims management, and other strategies to maximize efficiency are increasingly necessary to handle the growing influx of patients that need clinical care. Providers can drive that transformation by incorporating emerging technologies and skilled contractors that will help them deliver the accessible, high-quality preventative care patients need to thrive.
About The Author
Alyssa Rapp is the CEO of Surgical Solutions, a health care services company owned by Sterling Partners. She is also a lecturer in management at Stanford Graduate School of Business and the managing partner at AJR Ventures.