Hospital Cost Savings and Reimbursement

As hospitals look for new ways to drive margin improvement, in this video I explore the relationship of cost to reimbursement to achieve unparalleled cost savings.

At VIE Healthcare Consulting we adopt a unique strategy compared to other health care consultants. Our detailed approach uncovers tremendous cost savings for our clients by taking a holistic view of analyzing cost detail and how it maps to actual reimbursement.

Case Study: Cost savings in the OR

The OR represents your largest opportunity for profitability and revenue, but is also the largest driver of your hospital’s costs. In this video, I discuss the potential cost savings available in the spine, specifically in lumbar and cervical fusion cases, which are high-cost implants.

At VIE Healthcare, we carry out the usual analysis, that is, your cost by component and by biologic. We then benchmark that cost to national best practices based on your hospital size, market share and your utilization.
The difference in our approach is the additional information we request which we tie back to reimbursement to identify cost saving opportunities.

Taking a deep dive into every detail, we identify cost saving opportunities, by examining what each item costs and how it maps to actual reimbursement.

That detail extends to incorporate every DRG, analysis by physician, payer and revenue code.

We know from experience that hospitals can easily become buried in data they find hard to understand. Our goal is to make that simple and our holistic approach enables us to achieve that for our clients.

All profitability analysis starts with understanding

After carrying out our benchmarking exercise, we review the following (continuing to use the spine as our example):

• Your detailed patient and claims data, including all of the actual billed data for your last 12 months of spend.
• The previous 12 months of cases for the DRG.
• Detailed revenue codes to gain an understanding of the relationship of specific costs to your actual reimbursement.

Once we understand those costs, they can be mapped to actual reimbursement to uncover cost improvement, utilization improvement and process improvement.

3 potential areas for hospital cost savings  

In my examples, I identify the following areas for hospital cost savings:

Cost savings opportunities from benchmarking: In spinal implants, for example, we know that implant costs should not be more than 30% compared to reimbursement. If they exceed 30% of the cost, we know that cost savings opportunities exist.

Reimbursement: In some cases, we find that implants aren’t billed or issues arise with same-day cases being reimbursed at a lower rate. It is these areas that your hospital must be aware of as they represent significant cost saving opportunities. Another key point to consider is charity care cases which can be included during negotiations for your new vendor agreement. Without obtaining your reimbursement data, it is not possible to identify those cases and significant cost saving opportunities are missed.

Hospital mark-up: We also identify cost savings opportunities when the percentage mark-up applied by the hospital is incorrect or where similar items were picked in charge capture but not accurately used in a specific case.

It is essential to map to reimbursement as you begin to identify cost reduction initiatives because opportunities will exist to maximize your reimbursement.

Our unique approach results in unparalleled cost savings for our clients.

Learn more in our video or for a customized discussion, reach out to me at lmiller@viehealthcare.com or call me today at 1-888-484-3332, Ext 501.