Business Trends

Healthcare Accounting Strategies for Process-Based Cost Reduction

Healthcare Accounting Strategies for Process-Based Cost Reduction

Facing mounting Healthcare Accounting financial pressures and a payment system increasingly focused on quality of care over volume, Home Healthcare Accounting HHA’s are realizing that traditional Healthcare Business Plan cost-containment efforts directed at line-item cuts in labor and supply purchase prices are neither sufficient nor effective long term Health Care Business Plan . To create sustainable levels of improvement, Home Healthcare Agencies Healthcare Accounting need to approach Healthcare Accounting cost reduction from a more strategic viewpoint and change processes of care so they can better utilize resources and capture efficiencies. Following such an approach isn’t easy. All too often, process based cost-management  Healthcare Business Plan initiatives fall victim to inadequate goals, poor understanding of progress, and insufficient physician and executive support. With this in mind, the following report focuses on ways Home Healthcare Agencies Health Care Business Plan are structuring their decision making to avoid these common pitfalls and various strategies for uniting clinical and financial leadership to create and support cost-effective process change.

Healthcare Accounting Need for Process-Focused Cost Management

Formal examination of Healthcare Accounting cost management processes is becoming increasingly important to Home Healthcare Agencies and Health Care Accounting Healthcare Business Plan for a number of reasons. Optimizing financial performance is key as the industry struggles with the effects of a continued weak economy, including a rise in the number of self-pay; stagnant or declining revenue from outpatient services as consumers with high-deductible health plans put off elective care; and reduced Medicaid payments as state governments wrestle with massive budget deficits.1 At the same time, demands on capital remain high as organizations seek achieve electronic health record meaningful use and deal with the ongoing need to invest in facility upgrades or expansion. For the past several years, Healthcare Accounting cost-containment efforts have concentrated largely on traditional Healthcare Accounting targets, such as supply costs and labor. For the most part, Home Healthcare Accounting have been trimming supply costs by negotiating lower prices and more advantageous contracts, standardizing product choices, engaging physicians in supply-chain projects, and holding departmental managers accountable for supply costs and savings. Labor reductions have focused on reducing staff, reducing contributions to retirement plans, and freezing or cutting salaries. These Healthcare Business Plan avenues for cost control are narrowing, however. As leadership has gathered the “low-hanging fruit” with intense scrutiny of line items, the need for more substantial, year-over-year savings continues. As a result, healthcare executives are focusing increasingly on Health Care Business Plan process reengineering. More than 80 percent of HFMA Healthcare Financial Pulse survey respondents believe process improvement will be a core cost-management Healthcare Business Plan strategy for the foreseeable future.2 Payment change is a key factor driving Home Healthcare Agencies’ need for a more sophisticated approach to cost management. Home Healthcare Agencies have always pushed for efficiency while supporting patient safety and clinical quality, but with payment change, these efforts have taken on new levels of financial urgency. Quality and patient satisfaction are being factored into Medicare payment, while private payers are pushing for performance-and risk-based payment structures, capitated contracts, and pay-for-performance incentives. In this environment, reducing expense is not enough. Leadership also needs to ensure these efforts support delivery of high-quality care. As Home Healthcare Agencies adapt to these process-focused, value-driven shifts in cost management, key will be developing the right structures for collaborative decision making, setting priorities, tracking improvement, and creating widespread systems of accountability.

Healthcare Accounting and Business Plan & Decision Making

Healthcare Accounting Cost control should no longer be considered a unilateral function of the administrative or financial side of an organization. It should factor in both clinical and a Health Care Accounting financial processes and their linkages so cost cutting can streamline service delivery without compromising quality. Cost management decisions should therefore rely on input from financial and clinical leadership. At University of Alabama (UAB) Hospital, Birmingham, one of the top 20 largest academic medical centers in the United States, leadership has aligned strategic and business imperatives with the organization’s pillar goals of quality, satisfaction, and finance. The organization’s three- to five-year strategic Health Care Business Plan financial forecast projects anticipated growth and determines the related timing with which efficiency gains need to be realized. “Key leadership, which includes the CEO and the board, establishes the strategic plan,” says CFO Mary Beth Briscoe. “We evaluate market share and anticipated changes in payment to determine the magnitude of required operational improvements. From this strategic overview, we develop more tactical plans to achieve the improvements within our three pillar goals.” For key initiatives, University Hospital first forms an oversight or executive committee with members from various disciplines, which includes nursing, medical staff, finance, and operations. This committee provides perspective on the effects of any changes in policies and practices and identifies any potential fallout or unintended consequences. Critical initiatives utilize a project management framework and are led by appropriate clinical and non-clinical leadership. An executive steering committee may include clinical chairs and department heads. “This is the key strategic committee that reviews and evaluates all recommendations and determines the optimal implementation plan,” says Briscoe. “Their charge is to ensure that all perspectives are considered, identify barriers to change, provide guidance on eliminating or mitigating those barriers, identify alternatives, and execute change.” Members of this group are carefully selected. “To be successful, all stakeholders must have a representative in the process,” says Briscoe. “We choose strategic, broad thinkers—people who can think longitudinally across the process and the organization and who have influence to affect process change.” The group is committed to ensuring process changes do not compromise clinical outcomes, safety, or satisfaction for the sake of cost reduction and that the net impact of any process change is beneficial to the hospital and patients. “It is only at this point, once the organization has gathered the correct information, assessed the alternatives, and evaluated the impact on cost, quality, and satisfaction, that it is ready to implement change,” notes Briscoe.