Adjust calculation frequency. As finance leaders adopt more detailed costing methods, they also should consider the calculation frequency and costing time period. A move from year-to-date to monthly or quarterly costing will improve opportunities for trending and process efficiency.
Improve the cost accounting system. The end goal is a cost accounting system that enables reporting across the care continuum and across multiple financial functions as well as produces information that health system leaders can stand by and act on.
Strategy 2: Deploy external perspectives and benchmarking to identify and drive sustainable cost restructuring efforts.
Competitive positioning requires beating competitors on price and performance. To identify areas that offer the most potential gain and gauge whether they are setting the bar too low or too high, healthcare leaders first must understand how processes can change and how peer organizations are performing. Successful practices with this strategy include the following.
Bring in fresh eyes. Outside experts can bring in new perspectives and provide an objective, consistent third-party view across a system.
Use external benchmarking to establish an outside view. External benchmarking supports health system leaders in setting targets that push their organizations to optimize performance, while also reflecting informed assessment of realistic opportunities. It also provides actionable data to identify and address challenges as they emerge.
Learn from experience. An organization’s own experiences provide an important reference point. As an organization’s experience grows, so too will the value of internal benchmarking data that demonstrate how often and how closely the organization was able to achieve expected returns.
Strategy 3: Engage clinicians with accurate and actionable data on quality and costs.
An organization’s ability to generate consistently high-quality, cost-effective outcomes is a crucial differentiator for consumers and payers alike. Transformative health system change simply is not possible without engaged physicians, but only 14% of respondents indicate their clinicians have access to actionable information to help them address unwarranted clinical variation and other cost-related quality concerns. There are many opportunities to use improved analytics to better engage physicians.
Involve physicians early. Physicians should be involved in selecting the systems, tools and metrics a health system uses to collect and display clinical data in outcomes reports.
Build trust in the data. Be transparent about data sources and what these sources do and do not provide. Seek consensus on sources most relevant for different practice areas and specialties.
Anticipate and address common concerns. Physician concerns include the adequacy of severity or risk adjustments and proper attribution of patients.
Focus on developing a single source of truth for physician data. Focus on developing a clinical analytics solution that can aggregate data from disparate sources and systems into a single source for clinical cost and quality data.
Enable comparisons with peer groups. As trust in the data grows, enable physicians to compare their performance with peers, beginning with internal peer groups. Physicians whose performance is falling below their peers typically are eager to close the gap.
Be consistent with expectations. System executives must establish expectations for appropriate behavior and ensure that necessary actions are taken if performance expectations are not met.
Strategy 4: Establish greater accountability for achieving performance improvement goals.
Forty percent of respondents are targeting cost reductions of just 1% to 5% of overall costs, and most respondents are achieving only “some” of their cost transformation goals. A mixture of moderate goals and moderate success does not result in the transformative outcomes the current healthcare environment demands. Three practices are essential for success.
Build a culture of accountability. Accountability ultimately is a question of culture, defined by an organization’s ability to unite around common goals, and by the willingness of stakeholders organizationwide to take ownership of and responsibility for performance results.
Establish a results management office. A results management office (RMO) establishes a structured approach to accountability throughout the organization, providing a range of change management and support services to performance improvement teams. While an RMO and its staff help facilitate change, accountability remains with the team and its designated operational leaders.
Implement a strategy management solution. An effective strategy management solution should enable stakeholders throughout the organization to easily track progress, and drill down to investigate possible causes when progress stalls or begins falling behind targeted milestones.
Facing the future
To prepare for the future, a commitment to continuous performance improvement is imperative. Opportunities will change and differ from organization to organization, but the strategies discussed in this article are applicable across all organizations. They are designed to help make health system leaders better informed, more accountable and more able to drive change within their organizations. Supported by successful practices that combine performance-improvement tactics and technology, these strategies will help leaders set appropriate goals and build a culture of accountability and engagement that optimizes the chances for success.
Read the full report
Kaufman Hall/Axiom partnered with HFMA in fielding the survey and analyzing the findings described in this article. It was the first time HFMA joined Kaufman Hall/Axiom on this annual effort. Download the full report.