The nation is embroiled in debating the deficiencies in the healthcare industry. Unfortunately, with little exception, attention has been placed on the need to reform the insurance segment of the industry while the root cause of today's problems is rarely discussed in adequate detail; i.e. the cost of care.
Careful consideration of the driving forces that have disrupted the nation's healthcare insurance model yields only one obvious conclusion: we are in the midst of a cost crisis. Efforts to reduce Medicare and Medicaid expenditures have resulted in shifting costs to other payers. As premiums soar for commercial insurance, employers reduce or eliminate coverage in order to protect profit margins. The consequences of cost shifting in the healthcare industry, while critical from the aspect of reforming insurance, are highly complex and not the focus of our modeling efforts.
For decades, healthcare providers have emphasized the need for cost containment and the management of expenses. Despite the use of Six Sigma, the application of the concept of "lean" methodologies, value analysis and the implementation of sophisticated IT data management systems, hospitals and health systems are on an intensifying "burning platform" that is creating economic chaos for the nation as a whole.
Numerous factors have evolved to contribute to the inability of the industry to reduce the non-payroll expenditures that comprise in excess of 50% of the nation's hospital expenditures. As part of a 60,000 hour research and development project which began in 2003, The Center for Modeling Optimal Outcomes® LLC has developed a unique operating model designed to eliminate inefficient processes and wasteful spending for healthcare providers while strengthening the operational aspects of their organizations.
In addition to the various concepts included in the intellectual property portfolio developed by the Business Services group of The Center, this model includes explicit mechanisms to create of a culture of change acceptability to meet the unique needs of healthcare provider organizations; including processes to mitigate preferences by physicians, department directors and other constituents within provider organizations.
Part of the planning process undertaken by The Center has identified potential measurable expense reductions in the range of $35,000 to $50,000 per bed in service for acute care providers. These projections are in keeping with estimates prepared independently by one of the nation's leading healthcare consulting firms.
Those familiar with the problems that healthcare providers face know; the best data and access to lowest pricing on volume purchasing contracts are meaningless unless change can occur. Meaningful expense reduction requires action beyond merely focusing on product pricing and data solutions. Until providers can also address the issues which are central to people, collaboration and change, the services, products and outcomes they utilize will be sub-optimal.
The question exists: What has prevented nation's leading consultants and group purchasing organizations from assisting their client/members with realizing such substantial reductions in their non-payroll expenditures?
The answer is simple: The inability to create a culture of change acceptability and a standardized model to deliver it. Until now, service providers (consulting firms and group purchasing organizations) have offered an array of "me too" concepts intended to improve the outcomes for healthcare provider organizations. While most firms offer "people and change" services within their human capital practices, none of these offerings are "set apart" from others attempting to meet the critical needs of healthcare providers.
The Center has designed replicable processes to enable service providers to differentiate themselves from their competitors and, through the protection afforded by intellectual property rights, dominate the segment of the industry relative to "people and change."
In addition to the operating mechanisms essential for change acceptability and the various concepts for leadership and team dynamics outlined in the Business Services section of this web site, the "Strategic Initiatives in Healthcare�" offered by The Center also include the following services:
Resource Maximization®, a comprehensive array of tools and training material that delivers the next generation of the healthcare application of value analysis, operating mechanisms designed to reduce employee turnover (critical to enhance quality and patient satisfaction), as well as models that utilize open business modeling to develop highly effective shared services.
Resource Maximization Coordinator� provides healthcare organizations with the explicit methodologies to create a culture of change acceptability and to provide access to resident staff from the service providers to manage the ongoing process. The position of Resource Maximization Coordinator® has been created to ensure healthcare providers will have access to individuals with the skills and knowledge necessary to manage the processes necessary to reduce the 53 - 57% of every dollar expended for non-payroll purposes. As providers move into uncharted waters regarding transparency for cost and quality metrics, their ability to reduce expenditures falls into only two categories; i.e. salaries and benefits or all other expenditures. Obviously, everyone from the members of the board of directors to the employees in all operating departments will need to reduce non-payroll expenditures further than current methods allow.
Consumption and Utilization Analysis�, a statistical, information technology-driven service and data solution that brings current lean methodologies into a new dimension to reduce waste and abuse of products and services. It is a tool designed to drive change management services while realizing substantial savings for the client. This service is a software based data solution that is available through The Center (patent pending).
The following documents provide overview and insight into The Center's capabilities and observations as they apply to the healthcare industry: