Million$ in Your Basement - How 3 Key Areas Can Position You for Multi-Million-Dollar Growth
Alan Yordy, Senior Partner, CEO Advisory Network
Each new year brings greater challenges for health care leaders. Now more than ever, we are challenged to think outside of the proverbial ‘pillbox’ when it comes to efficiency and revenue. For those of us who have had the privilege to serve in senior leadership roles, we’ve seen tremendous progress when it comes to improving efficiency and outcomes while providing better service to patients. But the fact remains, there are three key operational areas that matter most and still provide the greatest opportunity…
…ironically, they are services that we have historically “buried in the basement ” of our facilities.
Despite the leaders fact that important services of labs, pharmacy and imaging are often found in the forgotten corridors of our facilities, if health system find new ways to optimize costs and re-position them in the ambulatory environment for growth, there are tens of millions of dollars in operational revenue right at their fingertips.
Take Pharmacy for example. There are many players seeking to fill all of your prescriptions – no surprise there, right? In our efforts to focus on so many other key operational areas in recent years, we’ve acquiesced, surrendering one of our greatest opportunities to serve our patients and generate significant revenue. At CEO Advisory Network, we have select business partners who have deep expertise and specialize in identifying new, innovative ways to reduce costs within your pharmacy while helping you identify ways to recapture revenue you’ve left for others to snag. This requires developing comprehensive strategies to optimize 340B programs and capturing a significant amount of specialty drug prescriptions. Bottom line: If a health system has a top-performing employee pharmacy program, much of that expertise can be extended to your patients. The combination of drug expense reduction and prescription capture has potential for million$ of dollars currently slipping through your fingers into the hands of ready and willing pharma competitors.
Consider labs for a moment… more than 90% of hospitals operate their own lab, which represents 6-8% of hospital patient care expenses. Our experience suggests that almost every hospital and health system can take 15% out of lab operating expense, including patient blood management. Despite room for volume growth in most clinical laboratories,
…the number of hospitals and health systems running a lab outreach program dropped from 80 to 76 percent...
in 2017, fearful that PAMA would take all profit out of ambulatory lab services. Yet, by reducing the cost of operations and focusing on efficient lab outreach, lab can help give your bottom line a shot in the arm. The good thing about laboratory outreach is that as your test volumes grow, your unit price per test decreases due to economies of scale related to higher volumes. Of course, health system must be market leaders and have critical mass to achieve success.
Imaging is similar to lab with much greater impact, approximately 14-18% of hospital patient care expenses. Payors are placing more pressure on reimbursement and we should plan for hospital differential Medicare pricing to be diminished or eliminated. Our experience suggests that a focused effort to optimize imaging services can improve operating efficiency by 15-18%. Much of this effort focuses on supply chain and maintenance contracts for increasing utilization of sophisticated imaging equipment.
It’s time we find opportunity in those services we often relegate to the basement of our facilities.
CEO Advisory Network and its business partners have a track record of success in helping hospitals and health systems seize opportunity in each of these core areas and more. If you’d like to learn more, please contact me at email@example.com.
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