The Emergence of Margin Management Software in Healthcare
April 6, 2023
Skyrocketing healthcare costs and razor thin margins have driven an industry-wide focus on maintaining high quality care while achieving real cost reductions. There are a lot of resources in the market that explain strategies organizations can follow to achieve healthcare cost reductions, which have identified hundreds of opportunities to reduce costs. The real challenge for healthcare providers is having the ability to identify which initiatives should be prioritized. Leading healthcare organizations across the nation are leveraging the StrataJazz® Continuous Improvement tool to help identify and prioritize cost saving initiatives.
Effective Ways to Drive Hospital Cost Reduction and Maintain Quality of Care
Historically, healthcare organizations have utilized consultants to identify cost reduction opportunities. In recent years, health systems have started moving away from these traditional practices due to the high cost and low return. Consultants account for billions in health systems’ spendings each year. However, leaders across the healthcare industry have found themselves replacing consultants with technology solutions, resulting in a more cost-effective approach.
Strata got the chance to work with a small, multi-site health system after it ended an engagement with a national consulting firm. While the national consulting firm helped the health system identify areas for revenue enhancements and cost savings, it wasn’t able to provide this organization with a way to prioritize the areas identified. In partnership with Strata and by using StrataJazz® Continuous Improvement, the organization not only identified, but prioritized and tracked projects. As a result, the health system leveraged validated cost data to engage finance, quality and clinical operations leaders, kicking off over 108 initiatives for continuous improvement, as prioritized by the CMO. Within only a few short months, the organization discovered over $85,000 in cost savings from these initiatives.
Care New England Health System, a Providence, RI-based nonprofit health system, embarked on a similar cost-saving strategy and saw immediate, positive results.
Vice president of operational excellence Erin Pelletier, MBA, PMP, CNE, said,
“Having the data to drive the discussions in a completely new way, that we’ve never been able to do with a consultant, [has been] fantastic.” Pelletier went on to add, “It comes from a place of trust; we are on the same team, we all want the best outcome for the patient, the best for the hospital fiscally and the highest quality. We all have the same shared values. It’s a completely different tone than having a consultant come in and say, ‘Well, the rest of the country does it this way.’ It’s a different vibe and it’s setting us up for success.”
As evident in these two case studies, although consultants can play an important role in improving the efficiency and cost of healthcare delivery systems, they shouldn’t be viewed as the backbone for a successful cost savings strategy. Healthcare organizations have the internal resources and drive to succeed at cost reduction and quality improvement on their own when equipped with the right tools and strong processes.
The Right Tool for Continuous Cost Savings
Over $3 trillion is spent on healthcare every year in the U.S., but one-third of that spending is considered wasteful due to inefficiency, redundancy, variation and harm. Health systems across the nation have significant cost reduction needs, yet only 83% are consistently and predictably hitting targets. StrataJazz Continuous Improvement is designed specifically to enable health systems to know what actions to take to increase margin, track financial benefit and instill accountability for results.
Historically, attempts to eliminate wasteful spending in healthcare have relied on cost reduction initiatives that were manual, time-consuming and ultimately ineffective. Continuous Improvement leverages advanced algorithms, targeted analysis and internal benchmarking to quickly pinpoint drivers of unnecessary spending.
StrataJazz Continuous Improvement (CI) is healthcare’s most unique tool for continuous improvement and margin management, leveraging automated savings algorithms to identify unnecessary variation and waste combined with a tracking tool and workflow that drives accountability and action. Strata partners with health systems to implement improvements and establish an ongoing process for continuously identifying and activating opportunities.
Leveraging StrataJazz Continuous Improvement Tool to Execute Savings Initiatives
A small health system partnered with Strata and utilized StrataJazz Continuous Improvement (CI) tool to centralize and automate tracking initiatives, sustain results and grow its continuous improvement efforts. Additionally, the Continuous Improvement tool has enabled this organization to leverage algorithms to identify additional clinical and utilization variation opportunities. By knowing the real time financial impact of decisions, the health system was able to focus first on the savings initiatives with the highest likelihood of success. Continuous Improvement enabled this health system to automatically track over 100 initiatives, begin sustaining and expanding on results of major consulting projects and identify $85,000 in cost savings in just the first few months of being equipped with the tool.
Strata offers a platform of software and service solutions that help healthcare providers reduce the cost of care. StrataJazz can help organizations fight the cost curve in healthcare by providing advanced and integrated solutions.
To learn more about StrataJazz Continuous Improvement, see additional resources: