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Proactive strategies for hospitals facing steep reimbursement cuts

Hospitals and healthcare systems across the country will soon be facing large cuts in Medicare if the U.S. Congress cannot reach an agreement on an alternative deficit reduction plan in order to avert the so-called fiscal cliff, therefore it's a good idea for these organizations to start being proactive.

Andy Ziskind, managing director and solutions leader at healthcare management consulting firm Huron Healthcare recommends three main strategies for healthcare organizations: identifying cost savings throughout the care structure by looking at every aspect of the organization, including supply chain and labor costs; improving care coordination by improving communication and collaboration throughout the system; and achieving physician alignment so caregivers are fully engaged in hospital initiatives to improve quality and increase efficiency.

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"Even without the fiscal cliff, all hospitals are re-examining their efficiencies because they are all anticipating reimbursement declines," said Ziskind. "Hospitals really need to work on operational improvement and reducing redundancy by making sure they have the right services in the right place at the right time. Although the cost pressures make healthcare employees feel like they are in a hard environment, this is one of most exciting opportunities the healthcare industry has ever faced in the last 50 years. It's a chance to redesign healthcare in away that is safer and more cost effective."

Hospitals and healthcare systems – if they haven't already done so – should begin the process of redesign by identifying where they may have opportunities to reduce costs, said Ziskind.

"One way of approaching it is to assess the degree of opportunity across all areas," he said. "It's uncommon to see a hospital performing poorly in all aspects. So maybe labor could be improved or maybe it's the supply chain, but it won't come from one single initiative; it's multiple aspects together and it will start to change the fundamental ways a hospital operates. The hospital becomes more lean, more focused, more data driven, and you end up with a more efficient hospital overall," he said.

Ziskind added that he has noticed when hospitals are able to improve communications, standardize processes and have shorter lengths of stay for patients, they are able to also improve both patient and provider satisfaction.

[See also: Reimbursement issues loom as Maine holds its first telehealth summit]

"People are communicating better and inefficiency goes down," he said. "Everyone feels better about the process because of this."

The majority of hospitals already have various initiatives to improve efficiency under way, however, he said, "… hospitals should always ask themselves – can we do this change ourselves or do we need to get outside help on this? In general, at least considering outside help to put programs in place makes sense from both a financial and strategic perspective."

If an organization decides to handle initiatives in-house, Ziskind said, it's important to remember that everyone will be working on the initiatives while also trying to do their regular jobs.

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