Improving Cost Management for Healthcare Organizations

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Never before have healthcare providers faced the level of change that they do today, both in how care is organized and in how it is financed.  Health systems are striving to better manage quality and risk and to extend their management of risk to new populations, including PPO patients that have traditionally been in fee‐for service models.

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For experienced health systems, such as those in Michigan, the focus is on extending care management to a broader population and implementing increasingly sophisticated tools to better manage their risk contracts.

Improving cost management for healthcare organizations

According to a report written by Accenture,  Running IT like a business in the healthcare industry by Craig Mindrum, if the health industry is to achieve the goals of patient-centered health care while con­trolling costs, CIOs should borrow the fol­lowing approaches from the top performers uncovered in our high-performance IT research.

Focus on more strategic metrics

In addition to traditional IT metrics, CIOs should identify the measures that are linked more closely with the organization’s most important business objectives for short- and long-term outcomes.

Understanding which business functions influence these metrics the most can help determine how IT initia­tives can not only support but also improve these metrics. These more significant metrics may include data points such as internal and external resources aligned to business requirements and priorities; legacy systems proactively retired; and integrated business and IT changes reflected in the IT architecture.

Leverage outsourcing to control costs

The use of outsourcing providers is an impor­tant aspect of effective cost management. It’s also a way to gain access to critical IT skills, improve organizational agility and flex­ibility, increase the effectiveness of business processes and lower the total cost of owner­ship of applications and infrastructure.

Currently, many healthcare IT organizations are not making significant use of outsourc­ing strategies. Accenture found that IT high performers approach outsourcing as a partnership with service providers, which enables CIOs to extract significantly more value out of their application and infrastructure investments. High performers are also more effective at employing sophisticated metrics and processes to track the effectiveness of outsourcing service providers.

Directing spending toward more strategic initiatives

For IT departments, applications are the lifeblood of business value. Accenture's research found that compared with their lower-performing peers, high-performance IT organizations invest more heavily in application development: 70 percent of their resources are devot­ed to discretionary spending, such as deploying, test­ing, integrating, building or enhancing applications.

By comparison, other organizations spend less than 65 percent on such activities. This means lower per­formers are spending less time and fewer resources building new functionality and more time simply fixing and running existing, older applications.

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