Healthcare Cost
Attempts to achieve substantial cost reduction without optimally managing patient flow variability are doomed to fail
Contrary to popular belief, healthcare costs can be decreased while simultaneously improving the quality of care. Many efforts are currently underway attempting to achieve these goals: benchmarking and employing best practices from other healthcare organizations, improving care coordination, bundled payments, accountable care organizations, increased adoption of healthcare IT, and others. While each of these initiatives is beneficial in its own right, together these efforts are still insufficient for substantial and sustainable healthcare cost reduction. This goal can only be achieved by adopting and implementing healthcare adapted scientific operations management methods, first and foremost – managing patient flow.
Patient flow variability management has the potential to decrease US healthcare cost by 4-5% by one estimate, or $200 Billion per year by another.
- Every hospital that applied IHO Variability Methodology® achieved multimillion annual margin improvement. At one hospital it resulted in over $100 million in margin improvement plus over $100 million in avoided capital cost.
- Managing patient flow variability: A necessary foundation for improving quality and reducing cost. National Academy of Medicine publication.
- Delayed Operating Room Availability Increases Mortality and Impacts Total Hospital Costs. This provides another proof of the necessity to perform Step I of IHO Variability Methodology® as there is no other way to control waiting times in a busy Operating Room.
- In an era of healthcare reform, hospitals in particular, are financially vulnerable as a result of payment decreases even as more patients enter the healthcare system.
More Patients, Less Payment Increasing Hospital Efficiency in the Aftermath of Healthcare Reform. Health Affairs, January 2011.
Cost reduction through optimal patient Flow Variability Management Healthcare Cost Corner
Hospital costs can be decreased by millions of dollars annually by adopting the Institute for Healthcare Optimization’s approach to managing variability in healthcare delivery.
Case Study
See how Cincinnati Children’s Hospital increased annual revenue by $137M, and avoided $100M in cost, while improving quality of care.
Resources
Joint Commission Resources Book
The IHO’s approach to managing variability in healthcare delivery is the central theme of Joint Commission Resources’ new book.
See Commission Results
IOM Report: Transforming Health Care Scheduling and Access
The Institute of Medicine (IOM) recommended IHO Variability Methodology as one of the six principles to address the compelling issue of access to healthcare.
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