Government Mandates Biggest Obstacles to Healthcare Cost Reductions

In a HealthLeaders Media report, over one-quarter of U.S. healthcare executives said that government mandates are the biggest barriers to reducing healthcare costs in their organizations. Almost 90 percent said that they lacked the necessary data to even identify the opportunities for cost savings. Entitled Cost Containment: Targeting Cuts, Enhancing Efficiency and Using IT , the report found that 27 percent of polled executives listed government mandates as the top cost-containment obstacle, followed by physician-hospital relationships (19 percent), and non-supporting organizational cultures (15 percent).

Some executives reported having realized successful healthcare cost-containment initiatives with 32 percent of this group citing purchasing and 21 percent citing labor efficiencies as the most common initiatives for sparking high-dollar reductions. Other findings include:

• 89 percent of respondents lack clinical and financial data to locate areas for cost savings;

• About 40 percent saying they need to cut at least 6 percent from their annual budgets;

• 68 percent of respondents said continuous improvement techniques are the most useful tool for fostering cost-containment initiatives; and

• 32 percent expect to expand their IT staff.

“Our research illustrates that one-time cost slashes are not a long-term solution for hospitals and health systems. Leaders need smart and sustainable plans for spending less money,” says Edward Prewitt, editorial director at HealthLeaders Media. “By enlisting your entire team and applying smart IT solutions, executives can identify opportunities for improvement, then benchmark and monitor processes to deliver on efficiency goals.”