Becker's Hospital Review

20 Sign up for the COMPLIMENTARY Becker's Hospital Review CEO Report & CFO Report E-Weeklies at www.BeckersHospitalReview.com or call (800) 417-2035 and altering electricity and water usage. Hospitals can also look into other green initiatives such as waste reduction and reprocessing of operating room supplies, and the long-term gains can greatly outweigh the short-term investments. 10. Review drug costs. As mentioned earlier, physician preference items are a huge opportunity area for hospitals looking for new ways to achieve profitability, and managing the costs of pharmaceuticals is an important branch of that tree. "It's a savings item where you'll get paid back in five to seven years, for example, but then it's all gravy because you'll use less power, water, etc.," Mr. Rico says. Mr. Rico says at Sky Lakes Medical Center, there is an ongoing dialogue between pharmacists and physicians to figure out which drugs are the most effective for clinical purposes and if there is any overlap with generics. 9. Look within the operating room, emergency room and home health arenas for throughput issues. A financially strong hospital is one that wastes little to no resources. The OR, ER and home health areas are havens for inefficiency due to varying factors such as missed appointments, mismanaged scheduling, poor capacity management and other throughput issues. Mr. Rico recommends hospitals conduct internal analyses of those areas, which are typically expensive service lines within a hospital, to find out where the kinks are in the continuum of care. "Get experts to review those areas on how other people are doing it better," Mr. Rico says. "We're doing an analysis in the OR to find out: Here's how you should do a case and handle throughput, here's where logjams are and here's how you can streamline it. Over time, it saves labor, and it makes it more efficient for OR physicians." "We have our pharmacists talking to physicians to utilize cheaper drugs," Mr. Rico says. "For example, oncology has very expensive drugs, and we make sure that drugs A, B and C are all equivalent. Go for generics if they do the same thing clinically. But there has to be that clinical-to-clinical discussion between pharmacists and physicians." Dr. Fera of Ernst & Young points to a recent example of this at Memorial Sloan-Kettering Cancer Center in New York City. He says oncologists there made a decision to not give patients a new cancer drug, Zaltrap, because its clinical effects were no different than similar medicine despite the fact Zaltrap's cost — roughly $11,000 per month on average — was more than twice as high as the similar medicine. 11. Consider affiliations or more concrete transactions — even with payors. Mr. Alvey's organization, Saint Louis University Hospital, is part of Dallas-based Tenet Healthcare. He says because SLUH is part of such a larger health system, he immediately sees economical benefits through economies of scale. For example, Tenet is able to negotiate rates on payor contracts and technology equipment in a more effective manner because it is buying for more entities, which results in discounts. Standalone hospitals today face pressures beyond what system hospitals may be experiencing. In 2013, hospital CFOs and other executives may need to consider loose affiliations and partnerships, even in single service lines, to protect their hospitals' financial future. Affiliations should not be restricted to other hospitals and health systems, either, especially as payors are looking to enter the provider world, Dr. Fera says. The overaching point for hospital executives? Keep an open mind when it comes to the M&A world, especially in 2013. "When I look at hospitals and health systems and the ability to compete on a cost basis, I can't imagine how difficult it must be for a standalone hospital to do that these days," Mr. Alvey says. "Being part of a system allows you to use technology and cost savings and then share best practices [within the system]. It can also be used with the payor side on quality metrics. I can't imagine doing that as a standalone hospital." n REGISTER TODAY! Becker's Hospital Review Annual Meeting CEO Strategy, ACOs, Physician-Hospital Integration, Improving Profits and Key Specialties Co-Chaired by Chuck Lauer and Scott Becker May 9-11, 2013; Chicago Westin Michigan Avenue, Chicago For more information and to register, visit: www.beckershospitalreview.com/4th-annualbeckers-hospital-review-meeting.html

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