Healthcare faces increasing challenges and uncertainty, including cost pressures and government regulation. Providers must better understand actual costs in care delivery. Michael E. Porter and Elizabeth Olmsted Teisberg’s recent book, “Redefining Health Care: Creating Value-Based Competition on Results” from Harvard Business School Publishing, May 2006, reveals that applying modern cost accounting practices to health care reveals major opportunities for cost efficiencies and can actually improve outcomes:
- Over-resourced facilities (E.g. routine care delivered in expensive hospital settings)
- Under utilization of expensive clinical space, equipment, and facilities
- Poor utilization of highly skilled physicians and staff –Over-provision of low- or no-value testing and other services in order to justify billing/follow rigid protocols
- Long cycle times
- Redundant administrative and scheduling personnel
- Missed opportunities for volume procurement
- Excess inventory and weak inventory management
- Lack of cost knowledge and awareness in clinical teams