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Planning for ACA: Effective cost reduction

In the first two pieces in this series examining how providers can find success amid the rapid ACA-driven changes taking place in healthcare, I tackled the issues of improving care and enhancing quality. Perhaps the most front and center challenge facing providers today in preparing for the impact of the ACA is in the third pivotal area: reducing costs.
Hospitals across the U.S. are not only bracing for the cuts in Medicare that were included as part of the ACA’s passage, they are also preparing for the reality that delays in health insurance exchanges, and what was expected to be an offsetting increase in newly insured patients, may not materialize as hoped. Key steps providers can take today to ensure they are finding and capitalizing on immediate efficiency opportunities include:

  • Managing capacity: Providers need to be keenly focused on ensuring that their procedural rooms are operating at proper volumes and labor is being managed effectively. This will include a structured allocation of available hours based on capacity, patient demand and strategic directions. Organizations should also consider ways to instill an upbeat tempo in departmental operations, utilize call referral centers and patient portals to improve patient preparation and compliance, and incorporate anticipatory contingency planning into their capacity management programs.
  • Addressing clinical utilization: Hospitals should seek to drive consensus on the programmatic protocols followed at their facilities, such as guidelines on surgical treatment of breast cancer. A clinically led value analysis committee with increased emphasis on personal preference devices will drive success in bundled payment constructs and the overall movement toward value based care. Appropriate drug and lab formularies will also curtail unnecessary spending.
  • Moving toward a patient-centric model: The shift to a patient-centric healthcare system is not just about empowering patients to make better decisions. It’s also about helping them to make the most efficient use of the healthcare system. Providers can help not only patients but their own bottom lines by creating an environment where practitioners are practicing to the full extent of their licenses, including finding ways to rely more on mid-level providers and reduce costlier physician expenses. An increased focus on chronic disease management and primary care will also drive reductions in costlier hospital-based services as well as daunting readmission penalties.

The kinds of steps outlined here can yield substantial cost reductions and other improvements. But they cannot be instituted overnight. Physicians and other care givers have deep familiarity and comfort with the processes already in place, sometimes developed over decades. To drive meaningful improvements not only in cost reductions but also in access and quality will require a commitment from providers to build incremental and measurable improvements to the culture and mindset of the entire organization.
While the true impact of the ACA on providers’ bottom lines will not be clear for quite some time, what is certain is that maintaining the status quo is not an option. Organizations that succeed in the rapidly evolving healthcare landscape will be those that can adopt the spirit and mindset of Winston Churchill, who noted that “difficulties mastered are opportunities won.”
The views expressed herein are those of the author and do not necessarily reflect the views of Ernst & Young LLP.

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