Thinking Outside the Box for Health Care Cost Savings

It’s no secret that our health care system is undergoing transformational change. We are proving that the traditional mode of thinking — that lowering costs would adversely impact health — is simply wrong. Driven by policy and technology, our government, the private sector, and everyday citizens are upending an outdated, inefficient system that performs poorly and deprives millions of Americans access to the care they need, yet costs more than that of other developed nations. Amid all the gridlock in Washington, there’s one thing everyone can agree on: We need new ways of delivering health care that are high performance, high value and provide quality care for all.

Despite recent advances driven by big data, predictive analytics, new payment models, wellness approaches and coordinated care, we face many challenges in moving the system toward a new standard of value, and countless aspects of it need improvement. So how and where can we begin to find solutions that improve care while keeping costs in line? Start small to make actionable changes. Look for practical solutions and innovative ideas. Start from within communities, within individual health systems and delivery networks and within hospitals themselves.

Take the Veteran’s Health Administration, the largest health system in the nation, which has struggled for years to find efficient and effective ways to provide quality care to nearly 10 million veterans. The VA is a good example of a complex system that faces many challenges when trying to implement change to better serve their patients. Success was achieved by starting small, by harnessing simple technology to get patients in to see a doctor faster and shorten wait times.

Sometimes the best solutions can also be very practical. For instance, in an effort to improve operating room efficiencies and reduce supply costs, some hospitals employed a simple tactic: label OR supplies with price information. Research shows that when OR staff are reminded of supply costs, they are more cost-conscious and, for example, are less likely to open supplies that may go unused. With non-labor costs making up 40 to 60 percent of total OR costs, reducing supply waste can boost a health system’s bottom line, allowing for more money to be put into patient care.

Some of the greatest opportunities for change are being overlooked because they lie deep within the health system. One area for hidden costs is the hospital laboratory. Hospitals spend about $70 billion each year operating their labs. Yet this critical function most often is viewed as a cost sink, which is why many hospital systems outsource clinical testing to large, specialized companies such as LabCorp and Quest Diagnostics.

But a deeper look inside the hospital lab reveals an operation ripe for transformation — both in terms of becoming more efficient and becoming more cost-effective. Accumen is one company that has demonstrated that by applying rigorous, performance-based principles to the clinical lab, hospitals can lower their costs by as much as 20 percent and deliver faster, more accurate diagnostic results.

This fully optimized lab is a wonderful thing. Staff isn’t idle because technicians are cross-trained on equipment and functions, supplies are purchased at the lowest possible price, and new processes reduce unnecessary tests and even blood transfusions. Some labs become so efficient that they can perform services for community health care providers outside the hospital itself, becoming a source of revenue rather than a drain on resources.

Transforming the lab is yet another example of how a health system can perform better and save money. But at the end of the day, it all comes down to improving patient care.

Real health system transformation is not an either-or proposition. We can do a far better job of delivering quality, affordable care if we think outside the box.


Former Sen. Tom Daschle (D-S.D.) is CEO of The Daschle Group, and serves on the boards of the Edward M. Kennedy Institute, LBJ Foundation and Accumen, Inc.

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