Toolkit: Reconfiguring Cost Structure
Reconfiguring Cost Structure
This toolkit is a companion to HFMA’s Value Project Report, Strategies for Reconfiguring Cost Structure. The report addresses how to reduce costs while funding the investments in technology, clinical services, and innovation that are needed to engage in risk-based contracting and population health management and to prepare for disruptions in the competitive landscape. This toolkit provides examples of how costs are being reconfigured, lessons learned by organizations that have engaged in significant cost reconfiguration activities, and additional resources to help other organizations on the same journey.
Assessing the Situation
These resources help identify opportunities for reducing cost structure, provide examples of how these strategies might be implemented, and define factors that will help determine priorities for and timing of a population health management strategy.
Identify the main opportunity areas for cost reduction and strategies to help realize these opportunities.
Explore how to pursue select strategies outlined on the cost reduction opportunities map and potential benefits of these strategies.
- Cost spreading across multiple organizations
- Outsourcing and in-sourcing options
- Centralized services
- Redefining personnel needs and roles
- Opportunities for Moving Toward Population Health Strategies
Discover factors that will drive priorities for and speed of movement toward population health in an organization’s market.
Determining the Process
Develop a process to ensure that cost reduction opportunities are realized and maintained. Learn who should be involved in the process, the role that outside consultants (if any) should have, and other considerations.
These three case studies are composites based on the organizations visited as part of HFMA’s research on reconfiguring cost structure. They represent different strategies, organizational forms, and market conditions.
White Health. The system is in a market with a dominant payer that has had little incentive to experiment with value-based payment. Nonetheless, White Health sees an imperative to reduce costs to fund the full range of services its region needs. Its primary initiatives are focused on labor productivity and supply chain savings.
Red and Blue Health Alliance. In this case study, five strong regional health systems come together to achieve advantages of scale while maintaining their focus on longstanding traditions of service.
Green Health System. In this case study, a large, multi-state health system pursues multiple initiatives as part of an integrated approach to cost structure reconfiguration.