Jonathan Lauer of the Healthcare Performance Alliance, a solution provider at the marcus evans National Healthcare CXO Summit Spring 2013, on approaching cost reduction in a sustained and effective way.
Interview with: Jonathan Lauer, Managing Partner, the Healthcare Performance Alliance
With US healthcare spending continuing to outpace inflation, bringing spending down is a priority for healthcare organizations, according to Jonathan Lauer, Managing Partner, the Healthcare Performance Alliance. “But long term cost reduction requires sustained effort and focus. Opportunities to reduce spending are everywhere, but to execute effectively over time, organizations need people with the right skills and true accountability,” he adds.
The Healthcare Performance Alliance is a solution provider attending the upcoming marcus evans National Healthcare CXO Summit Spring 2013 in Palm Beach, Florida, April 15-17. Ahead of the event, Lauer shares his ideas on how healthcare CEOs and CFOs can improve their organization’s bottom line through cost reduction and revenue improvement.
With hospital operating costs constantly increasing, where can hospitals find cost reduction opportunities?
There are opportunities in the supply chain, purchased services and labor, but many organizations have already found the easy savings. The key is to have the data-driven insight that enables you to recognize waste which can be cut without damage to the organization’s performance. Effective cost reduction is not an exercise in shared sacrifice, but a healthy elimination of waste, which exists in many forms.
For example, the EPA estimates that 30 per cent of the energy consumed in commercial buildings is wasted. This represents a great opportunity to reduce costs painlessly, but it requires uncommon skills to achieve. Another large area of opportunity is sourcing. Many organizations conclude that their GPO contracts ensure that their costs for supplies, equipment and purchased services are competitive, yet we consistently find hard dollar savings in excess of 15 per cent across all categories of vendor spending, including those with GPO contracts in place.
Achieving these kinds of savings is not easy, but with the right data, skills, and accountability it can be done without pain or risk to the organization. It took decades for our cost problem to reach this point. It will require a sustained, data-driven effort to solve it. The tech industry is known for providing customers more for less every year. Healthcare needs such a mindset.
How can they improve their net revenue?
So-called “big data” is a hot area in many industries today and healthcare is no exception. Hospitals can leverage the power of their own data to optimize revenue. With the huge trove of data that is accumulated in the billing system every day and some mathematical analytics, hospitals can optimize both pricing and charge capture to extract the maximum possible revenue from their current patient and payor mix. For mid-size and larger hospitals, this work has an incredibly high ratio of benefit to internal effort.
With President Obama re-elected, what changes should healthcare organizations expect?
Healthcare spending in the US is 18 per cent of GDP and climbing. This is 50 per cent higher than the #2 nation. This is becoming a massive competitive disadvantage for the country, taking money out of the pockets of both families and businesses. Bringing spending down by reducing waste should be a top priority for every stakeholder in the healthcare industry. The key is to gain the insight needed to do it right and to take decisive action.
Interview conducted by: Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division
About the National Healthcare CXO Summit Spring 2013
This unique forum will take place at the Ritz-Carlton, Palm Beach, Florida, April 15-17, 2013. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event.
Please note that the Summit is a closed business event and the number of participants strictly limited.
About the Healthcare Performance Alliance
HPA is an organization of boutique consulting firms – specialists with unique expertise built over decades of work with hundreds of clients. We identify and implement sustained improvements in hard costs and net revenues. Emphasizing high impact, low disruption changes and a ‘pay-for-performance’ approach, we deploy best practices learned from within and outside healthcare. Focus areas include sourcing, energy conservation, and revenue cycle analytics.
About marcus evans Summits
marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-on-one business meetings. For more information, please visit www.marcusevans.com.
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