Cost Containment Under Healthcare Rules

Philip Betbeze, for HealthLeaders Media , October 13, 2011
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Yet those kinds of wins might be a little more difficult for smaller players. Perhaps that’s why nearly half (49%) of survey respondents told us they still have 6% or more to trim from their operating budgets. Another 49% saw their targets as less than 6%, while 2% feel like they’ve already achieved the savings they will need.

Because of expected reimbursement declines, it’s critical that not all of the savings from cost containment programs be plowed back into other spending. That said, perhaps better buy-in might be obtained if organizations involved in cost-cutting programs were inclined to share some of the gains. Some 48% of respondents do not share savings at all among stakeholders, while 30% say the direct benefit accrues at the facility level. Only 19% either use some of the savings for implementing a bonus structure for participants or that use a percentage of the savings for discretionary reinvestment in that department.

That is an area for the industry to explore, and one that might put it more in line with traditional economic rules. Because while healthcare leaders say programs that eliminate waste and reduce cost are not harming clinical outcomes and patient satisfaction, employee satisfaction does take a hit, with 37% of respondents saying the metric declines under the influence of such programs.

Perhaps a little sugar, in the form of sharing the savings, would help the medicine go down a little easier.

This article appears in the November 2011 issue of HealthLeaders magazine.


Philip Betbeze is senior leadership editor with HealthLeaders Media.
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1 comments on "Cost Containment Under Healthcare Rules"

jlauer (12/2/2011 at 2:03 PM)
I liked this article and insight into reasons cost containment, while recognized as important, does not always make the shortlist among other pressing priorities. One point not mentioned: While cost containment through reductions in utilization present a challenge due to the "schizophrenic reimbursement environment", reductions in indirect spending[INVALID] boring stuff like office supplies, energy, and other overhead[INVALID] go directly to the bottom line, regardless of payor mix. The ROI of such expense reductions is guaranteed; it's just not exciting!




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