A Fresh Perspective on Controlling Healthcare Costs


A Fresh Perspective on Controlling Healthcare Costs

Controlling costs is a way of life for healthcare providers.

I know from my own years of working in hospitals, cost management is always top of mind for senior healthcare leadership, firmly ingrained in their operational psyche.

Research backs up this view. A recent survey of healthcare CEOs by the Advisory Board, a health care research firm, found a majority are predominantly concerned with cost-cutting initiatives, including “preparing the enterprise for sustainable cost control” and “innovative approaches to expense reduction.”

Healthcare providers have essentially been tasked with doing more for less, but how is that even possible? Luckily, approaches are changing — leadership and administrators are now exploring ways to cut costs by using the latest information and infrastructure technology to streamline and automate processes wherever possible. Advances in machine learning, automation and the cloud offer tantalizing promise.

Recognizing opportunity

While revenue growth and increased profits are still significant components of any organization’s continued success, for the healthcare industry in particular, long-term financial sustainability is driven by effective cost control. This all has to be accomplished while keeping an eye on the Triple Aim: improving the care experience, improving the health of the populations, and lowering the per capita cost.

One area of healthcare improvement discussion often centers on the operational benefits of “systemness” or, put another way, the ability to automate the processes and information from across the organization so that they behave as a unified system and not a chaotic medley of inputs. This systems-focused operating model can reduce friction in the provision of care, setting the stage for better outcomes and higher patient satisfaction

The value of the human element

The largest variable and controllable operational cost in healthcare is labor, which could lead to the seemingly logical conclusion that workforce reductions are an effective way to cut costs. Cutting jobs, however, places an undue burden on the remaining staff and can lead to diminished quality of patient care.

So, how do you cut costs without wearing down staff and negatively impacting patient experience? Especially when so much of what the average patient comes to know as quality is centered on the people who provide their healthcare, not the results of the latest compliance audit or the number of healthcare certifications. Most consumer has historically been unaware when it comes to assessing the quality of healthcare – they know if the staff is friendly and smiling, if the rooms are clean and if the food is palatable. As basic as these criteria may be, it’s difficult to meet these baseline expectations with a limited workforce.

Utilizing the latest technologies to expand automation can provide a victimless way to cut costs. Investing in more cost-efficient infrastructure can also allow healthcare workers to reclaim valuable time, so they can spend more time focusing on their core responsibilities and not tedious administrative responsibilities. This enables them to meet the consumer’s increasing demands for service, which was also noted as a priority for hospital CEOs.

Combatting information overload

In addition to increasing demand for service, healthcare providers also have to stay up-to-date with advancements in medicine. When my father graduated from the University of Kansas medical school in 1952, the doubling time of medical knowledge was 50 years. When he retired from medical practice in 1980, it was down to seven years. Within the next two years’ time that number is projected to be as low as 73 days, and we cannot realistically expect medical practitioners to keep up with this expanding sphere of knowledge without assistance.

This highlights the importance and growing reliance on machine learning and artificial intelligence to handle this rich wave of data and the new standards of care that are the result.

Using technology to bend the cost curve

The approach to investing in infrastructure technology has come a long way in recent years thanks to the advent of the cloud. Users are no longer locked in to long-term commitments that result in hardware becoming obsolete as technology continues to advance at an increasingly rapid pace. And switching from capital budget outlays to operational expense models allows healthcare providers to more closely match cost with volume and usage, reducing wasteful spending on “idle” services. You can have access to the necessary compute capabilities during peak periods, and then scale down to lower operating costs during volume dips.

Cutting down or avoiding upfront expenditure altogether can make organizations more nimble, allowing them to quickly respond to changes in strategy and markets. This level of flexibility has helped fuel cloud’s increased adoption across all industries, including those with stringent security requirements. Even laggards are finally trusting and adopting the cloud, using it as a launchpad toward digital transformation and optimizing back office processes.

Better together

Healthcare organizations hoping for a bright future must find innovative ways to control costs without sacrificing quality. A sustainable future requires cost reductions focused on automation, machine learning and the processing of huge volumes of data, allowing caregivers to spend more face-to-face time with patients.

The use of any technology that can access, process or transmit patient data has to be thoroughly vetted before adoption to ensure that the data’s integrity is protected, and the overall solution must meet established regulatory requirements. But moving digital workloads to the cloud, specifically a HITRUST-certified cloud, can lower TCO and simplify compliance efforts.

Learn more about Rackspace and what we do, or read about some of the work we’ve done with healthcare clients such as pharmaceutical and health information technology giant McKesson.