Mayo Clinic Wants to Cut Outpatient Costs by 30%: Here's How They'll Do It

In order to prepare for a future of value-based care with cost-conscious consumers (and as part of its efforts to stem the tide of growing national healthcare expenditures), Mayo Clinic plans to cut the total cost of the outpatient care it provides by 30 percent by 2019. 

In just five years, one of the most recognized health systems in the country believes it can cut its ambulatory costs by a third — a heady goal, but one its leadership believes is attainable.

"If you look at the future and consider the impact of the exchanges, of Medicare payment rates, and frankly the needs of society for a better healthcare system, between now and 2019, in terms of cost per unit of service, we have to reduce that by 20-30 percent," says Robert Nesse, MD, CEO of Mayo Clinic Health System. "So how do you work that equation?"

How does Mayo plan to achieve this 30 percent reduction?

Through practice redesign, community health transformation and care at a distance.

Practice redesign efforts include the development of patient-centered medical homes in the community-based practices within Mayo Clinic Health System, and the use of technology to drive adherence to evidence-based medicine and guide patient outreach.

Community health transformation encompasses all efforts by the system to improve population health, both among its employees and across its Central Region.

Finally, care at a distance refers to Mayo's efforts to move care outside its main tertiary centers and into communities, and in some cases, patients' homes.

"If you have a community service need and you meet that in the community, you're doing that at a much lower cost for the service than if they go to the destination center," says Dr. Nesse. "We're working actively to transfer patients' ongoing care away from Rochester and back into the community to help decrease costs."

Mayo's cost-cutting initiative, which Dr. Nesse refers to as a substantiality effort, will also look for ways to reduce costs around administrative functions. "We have huge opportunities to share our services. For example, instead of having billing operations in 12 hospitals or 20 hospital or four regions, you actually can move towards aligning and implementing shared services for your finance, for your HR, and other things," he says. "It's using systems to support the new models of care, rather than just using systems to just cut your organization's workforce."

Dr. Nesse is quick to add that any sustainability efforts that involve consolidating services or personnel changes will be evolutionary. "You want to do [approach sustainability] in a way that supports your workforce, because we are still in a person-to-person business. We must be sensitive to the relationships between our patients and our staff. Healthcare isn't a technology business; the relationships with our patients are key to the future."

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