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4 Ways Hospitals Can Reduce Costs
Adaptive Medical Partners | Healthcare Administrators
National healthcare spending as a share of US GDP is expected to reach nearly 20% by 2025, up greatly from a mere 5% in 1960. This is placing lots of pressure on those that are footing the bill: governments, businesses, taxpayers, and individuals. And it’s a tremendous burden on the greater economy.
Exorbitant costs are placing pressure on medical facilities to find ways to lower costs as well. It’s the only way everyone will be able to have access to quality care. It’s also the only way hospitals can continue to be financially sustainable.
With that said, the time has come to think of solutions. Here are four ways hospitals can lower expenses:
1. Go Green
Hospitals require electricity to run equipment 24/7. There’s no way around that. Investing in sustainable energy sources, like solar and wind, can lead to big savings, as can a focus on energy efficiency and recycling. Hospitals should also remove waste (like not running the air conditioning when a room is empty and limiting use of printers).
By some estimates, going green can save millions of dollars per year. Overall, the American Hospital Association estimates green practices could save the entire hospital system $4 to $7 billion per year. That’s quite the chunk of change. Those savings will benefit everyone, from patients to hospitals to businesses.
2. Utilize new technologies
From automated appointments and check-ins that eliminate labor costs to wearables that relay health information to doctors, new technologies make healthcare more efficient–and therefore less expensive.
The internet of things (IoT) and big data perhaps hold the greatest promise, according to NEJM Catalyst, a healthcare solutions provider. By enabling remote monitoring through sensors, IoT devices can reduce labor needs and enable hospital personnel to respond to issues more effectively. Through data evaluation and predictive analytics, doctors can recognize health risks earlier, optimize medication, and prevent medical problems that could be both costly and life-threatening.
3. Use physician recruiters
It costs well over six figures to replace a doctor that leaves a hospital. The average physician turnover hovers just below 7%, which doesn’t seem like a lot but literally can cost hospitals millions of dollars each year.
The solution is to partner with physician recruiters that know how to effectively attract and land doctors for your hospital. For instance, at Adaptive Medical Partners, we use our proprietary AMP Score to determine how recruitable open positions are. Then, during the hiring process, we employ a strategy that ensures we find candidates that would like working in that hospital and are a good cultural fit for the organization.
4. Outsourcing non-core functions
Think about all those functions that a hospital doesn’t need to be actively involved in to optimize patient experiences and outcomes. Many of these functions, like landscaping and housekeeping, are already outsourced. But other functions, like IT and financial services, can be outsourced as well, just as long as the quality of work is maintained (that requires careful selection of vendors).
Outsourcing saves hospitals money because it eliminates overhead and the duty of covering benefits and perks that come with internal hires. For example, according to industry research, outsourcing facilities services can cut down operating costs for that function by 15-20%. That’s savings that can be passed to patients and extra money that can be used for improving medical services.
Winning by saving–the way forward for hospitals
Hospitals must cut costs so that they can boost bottom lines and improve patient outcomes and experiences. Reducing healthcare costs is also key to keeping the whole medical system sustainable.
Going green, adopting new technologies, using physician recruiters, and outsourcing non-core functions are great ways to decrease operational expenses. What’s needed to see these ideas through is a commitment from leadership and staff.