Mistakes Made when Cutting Healthcare Costs

November 30, 2014

By: David Roderick

Among increasing access and quality of care, the healthcare industry puts a great deal of energy towards reducing costs. These attempts to cut costs are sometimes counterproductive as healthcare leaders often reduce costs in areas where capital is needed and disregard certain key stakeholders in the industry. These mistakes can ultimately increase costs and decrease quality of care. Some of the more prevalent mistakes made when cutting costs in the healthcare industry are cutting back on support staff, maximizing patient throughput and failing to benchmark and standardize.

In any industry, the first expense to be cut is wages and personnel. In the healthcare industry this can have a very detrimental effect to the organization as the quality and productivity of physicians will decrease with the amount of support staff available. Each support staff that is laid off increases the amount of work for their former colleagues, which will lead to an increase in cost of treating patients.

Although not a direct cost-cutting measure, maximizing patient throughput can result in lower quality of care in the initial patient visit leading to revisits in the future. Also with maximizing throughput, healthcare providers usually do not communicate effectively to their patients the severity of their symptoms and the precautions they should take; this will result in return visits as well. This cost cutting mistake can be overcome with a sufficient staff and an optimized patient throughput taking into consideration the amount of time to educate patients to reduce the amount of revisits.

In the healthcare industry as a whole, there is a habit to create lofty strategic plans including mission statements, vision and strategic objectives, but a failure to benchmark can have negative implications for future operations. Benchmark and standardization of procedures can greatly reduce superfluous costs. This can be seen across countries, regions or even in the same healthcare centre. Five surgeons in the same hospital could be conducting the same operation five different ways. In which case there are significant costs that can be reduced and quality of care can be increased.

The global healthcare industry is one of immense complexity and as seen in these few mistakes that are made at the micro-level, healthcare professionals can fall in to a variety of traps when trying to cut costs. These are just a few examples, of many, where cost-cutting initiatives can actually lead to higher costs and lower quality of care.

DeGroote on Facebook DeGroote on Twitter WMA LinkedIn