3 Ways Hospitals Unintentionally Waste Money

Even as hospitals across the country increase their focus on reducing costs through job cuts and other efforts, they may be losing money in unexpected places. Here Andy Day, managing principle of the Hospital of the Future team in GE Healthcare's Performance Solutions business, shares three ways your hospital may be wasting resources — and how to reverse that cash flow to benefit your facility.

1. Medical staff members perform duties below their credentials. In many hospitals, medical staff members are working hard but not necessarily performing the tasks in their job description, says Mr. Day. "If you go into a typical hospital, you'll see people working hard on primary delivery of care, but they're not necessarily doing the things that are most important or aligned with their capabilities," he says. "You'll see RNs running all over the place, doing their work as well as some of the nursing assistants' work and some of the supply techs' work." He says when RNs perform clinical duties assigned to nursing assistants, the nursing assistants fill their time by working on support services tasks, thus creating a "flow-down effect" in which over-qualified staff members are performing duties assigned to other people. Because those staff members are more highly compensated, you end up paying clinical staff to do work that doesn't require medical training.

"You don't want RNs doing things that could be done by anybody," says Mr. Day. "You want to focus them on more patient education and symptomatology. In my experience, RNs spend only a third of their time in front of patients, and more than half of that time isn't spend on the right stuff." When you restructure your hospital to ensure RNs are spending time on clinical care, you end up with a lower FTE cost per case but a higher level of quality, Mr. Day says. You will also be able to redeploy nurses to areas suffering from nurse shortages because your RNs won't be busy with tasks that aren't their responsibility.

2. Hospitals are unaware of the real rate of supply and device utilization.
Mr. Day says many hospitals think their devices and supplies are more highly utilized than they really are. "When you measure it, some devices are used half as much as you think," he says. "We regularly see people thinking their pumps are 70 percent utilized when they're actually only 30 percent utilized." He says hospitals may be ordering more pumps because the medical staff thinks they've run out, when in fact, the pumps are hidden in closets and supply rooms. If your hospital is renting and buying supplies and devices that aren't being used, you will suffer financially because of a simple misunderstanding.

This resource waste can be tackled with ID tags and supply tracking, Mr. Day says. "If you have an ID tag on that pump, for example, and you know where it's going and how it's being used, you can start being very strategic about how it's being used and get much better utilization out of it," he says. "That's a good example of how technology can result in productivity and efficiency."

3. Inadequate patient communication causes more readmissions.
Improving patient education and communication will be even more essential as hospitals prepare to handle the influx of newly insured Americans in 2011. If hospitals are going to handle an increased patient load with a decreased number of physicians, hospital administrators and medical staff need to work together to reduce readmissions and improve patient health overall. "A big part of the cause of readmissions is non-compliance with medical directives post discharge," Mr. Day says. "Some of that is lack of diligence by the patient, but a lot of it not effectively communicating with the patient and their family. Hospitals need to make sure the patient is in touch with a physician resource after discharge so they can avoid unnecessary readmissions that hospitals are going to be less and less reimbursed for."

Mr. Day believes hospitals should pay more attention to managing patients outside the acute-care setting. This can be done by promoting relationships with primary care physicians, increasing patient and family education before discharge and using EMR technology to communicate with patients outside the hospital on a regular basis. As reimbursements for readmissions get lower and lower, hospitals must find a way to create a healthier, more informed patient population or face financial penalties for providing sub-par care the first time around.

Learn more about GE Healthcare's Hospital of the Future.

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