The symplr Executive Customer Council (ECC) convened again in September to share strategy and product roadmap insights. Kristin Russel, symplr’s chief marketing officer, led the lively discussion on cost-control strategies for health systems, with members weighing in on options to counteract pressurized margins.
Rising costs remain top of mind in healthcare operations, and the leaders in attendance—CIOs, CNOs, CFOs, and vice presidents of health systems—shared the operational and technological strategies they are pursuing to combat runaway costs. Read on for reflections from the meeting, centered on the importance of managing costs associated with:
- Healthcare’s labor shortages
- Tech fragmentation
- Regulatory complexities and costs
How to combat increased costs
Setting the stage for the discussion, participants shared examples of their expenses that continue to rise while reimbursement declines. For example, staff turnover rates and labor shortages are causing increases in spending, resulting in the average hospital margin decreasing significantly compared to last year. “After a difficult first half of 2022, optimistic projections for the rest of the year indicate [hospital] margins will be down 37% relative to pre-pandemic levels,” according to Kaufman, Hall & Associates.
In particular, supply chain costs rose and affected foundational costs, such as shipping freight and energy. In workforce management, systems struggled to source appropriate staff to handle patient volumes, especially in nursing and emergency department settings.
ECC member Linda Knodel, MHA, MSN, FACHE, FAAN, former CNE and SVP of Patient Care Services at Kaiser Permanente, said during the forum, “There’s a new trend by hospital leaders to review their strategic plan to ensure that cost, quality, and service levels are being maintained while we’re managing through recruitment, retention, and supply chain challenges.”
Knodel said that the new focus is on system interoperability, “so that decisions don’t take months to be made, and so we can be nimble in terms of our response to internal and external factors that influence the average hospital margin.”
Staffing and workforce strategies in play
To combat the staffing and cost challenges, ECC member systems said they’ve increased the use of incentives, bonuses, and educational support to aid recruitment volume and employee retention. Member systems also said they reflected on internal culture and, as a result, began to gain traction with “boomerang” employment—bringing back valuable former employees who typically don’t require retraining.
Members noted that they also decided to suspend or discontinue services provided by sister facilities in close proximity and streamlined existing processes and systems to reduce waste and cost. These practices included standardization efforts, managing scope in project initiatives, monitoring and restricting overtime spending, and increasing interoperable systems to remain nimble.
ECC member Kevin Smith, CFO of Luminis Health, said, “We’ve put in place innovative approaches to address rising staffing costs. Two years ago, we spent $15 million in agency fees. Last year, we spent $75 million due to rising hourly rates and overtime. To reduce costs without compromising service, we analyzed spending at the cost center level, discovering that we were inefficient across the system and uncovering huge savings opportunities.”
By adopting new operating measures, the health system has saved millions of dollars, Smith said, adding, “Our agency staffing budget is now well below $40 million. We’re also proactively promoting our culture so that more people want to stay. Staff who had left have returned to our system, realizing they had a better experience delivering care for us. We’re welcoming them back with open arms.”
Efforts underway to simplify technology ecosystems
With the average health system managing hundreds to thousands of IT applications, member systems said they have pursued multiple strategies to control costs related to technology proliferation. Resoundingly, ECC members recommended consolidating to a single vendor across the enterprise, especially post-acquisition or merger.
Other cost-saving strategies they have implemented include removing excessive custom functionality from applications and reverting to the base best practice version of the application, making it easier and more cost-effective for ongoing management and upgrades.
Another tactic ECC members report using is leveraging the primary enterprise vendor to rationalize other existing and new applications. symplr has seen evidence of this strategy at play and is fielding a significantly higher number of requests to work with provider organizations on savings strategies related to capital and consumables.
Keeping up with the market
ECC members agreed that revenue leakage can greatly hinder a system’s cost profile, especially as new venues of care gain traction in the market. Health systems can ensure their fair share of the local market by effectively marketing and driving awareness of service offerings. Solutions pointed out by participants in the discussion included:
- Fostering patient relationships by meeting patients where they are
- Reducing wait times
- Creating robust online interactions to ease appointment scheduling and retrieval of care information
Cost of time
The average health system expends substantial time and effort managing regulatory burden, with some estimates pinning the number at $39 billion annually. ECC members shared their thoughts on regulation and emphasized the need for a focused strategy wherein hospital accreditation, certifications, and other designations are essential to pursue. Failure to adhere to regulations and standards not only presents fiscal hazards and consumes significant resources but jeopardizes systems’ reputation in the market.
Members discussed how to cope with regulations that reduce margins—such as laws that cap hospital fees, not allowing charged fees to keep pace with rising costs, and regulations that reduce conversion rates for providers.
About symplr’s ECC
ECC members play a significant role in helping guide symplr’s overall strategy, focusing on how symplr’s solutions and services can improve outcomes for healthcare organizations and their workforces. symplr leverages the council’s insights to further our product vision and push thinking on how to best integrate our broader portfolio of solutions to deliver greater value. Because more than 5,000 healthcare customers use symplr’s products and services, the council will, by extension, impact millions of providers and patients nationwide.
The ECC is slated to meet again next quarter for a similar discussion on relevant strategies and practices. Stay tuned for reflections from the next meeting.
Read the press release about symplr’s Executive Customer Council.