1 ADVANCE for Executive Insight

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14 ADVANCE for Executive Insight
cover story Finance alone can no longer be solely accountable for cost containment. In the last few decades, the complexity of healthcare has increased dramatically while the approach to cost management has continued to follow old rules with outdated attitudes about who is ultimately responsible. scott frymoyer/john ciuppa Hit Your Mark Three cost-containment factors will usher in better healthcare delivery. By Phil Robinson Corporate leadership teams are highly focused on several dynamics that are changing the healthcare landscape across the United States — the potential impacts of insurance and care delivery reform, increasingly stringent clinical performance requirements, rapidly evolving physician/hospital partnering strategies and changing payment models, to name a few. For financial leaders, add to this list the pressure to maintain bond ratings, borrowing capacity and adequate cash flow to fund the seemingly unending demand for capital, as well as heightened emphasis on cost containment. Cost containment — and its accompaniment, productivity improvement — have been a continual battle, but many providers, especially not-for-profits, struggle with identifying and following through on cost-saving initiatives. Healthcare in the U.S. has grown increasingly complex but approaches to cost containment have not kept pace. Periodic cost reviews and reactive restructurings are common approaches, but they have been relied on much too often and are painful and disruptive to healthcare organizations. Given that legislative efforts are not focused on this, it is up to the industry to aggressively manage care delivery expense. As a healthcare provider faced with this challenge, how can you approach containing costs? Three important factors for better cost management should be considered. ACCOUNTABILITY Perhaps the most important point is that cost containment efforts will only succeed if embraced by all departments in a healthcare organization. Finance alone can no longer be solely accountable for cost containment. In the last few decades, the complexity of healthcare has increased dramatically while the approach to cost management has continued to follow old rules with outdated attitudes about who is ultimately responsible. No doubt, finance must provide the tools and systems to project, measure and report costs and cost savings, but clinical and administrative personnel are instrumental to this process. They know firsthand where waste and inefficiencies have developed, but in many cases, they have not been asked to play a role in weeding it out. Start by incentivizing and holding these employees accountable for identifying and achieving cost savings and productivity enhancements. ADVANCE for Executive Insight 15
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1 ADVANCE for Executive Insight

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