Healthcare IT Can Drive Down Hospital Costs

Healthcare IT Can Drive Down Hospital Costs

Most industries have learned that information technology is a powerful tool to increase productivity, strengthen efficiency, and reduce costs. For years, healthcare has been tentative in its adoption of technology. Providers have brought in software to manage business operations and clinical care.

But as healthcare executives are learning, the availability of new tools can mean a chance for innovations in how organizations can work. Specifically, by combining data acquisitions with analysis and looking at systems as a way of gaining insight, not just handling tasks and transactions, managers can reach conclusions never before possible.

Mount Sinai Hospital is an excellent example of how insight can lead to radical and necessary changes in business as usual, as Karen Handmaker, MPP, vice president of population health strategies for Phytel that is part of IBM’s Watson Health, wrote in Managed Healthcare Executive.

In the past, hospitals have taken what seemed a business-like approach to operations, in that they focused on increasing patient use of services to increase revenues. It used to make sense. Payment structures for services performed meant that providing more services not only increased billings and income, but amortized capital expenditures across a larger base of cases. The result should have been more profitable operations.

However, hospitals, and healthcare in general, don’t necessarily work the way all businesses do. In particular, payment mechanisms have changed significantly over the years. Rather than pay for service, many insurers have moved to mechanisms to contain costs:

The goal for health systems in the era of value-based reimbursement is to treat patients in the appropriate care setting with the lowest cost. While sometimes that will necessitate admittance to the hospital, increasingly healthcare providers are beginning to focus on providing the bulk of care, whenever possible, in ambulatory clinics, the patient’s own home, or other non-hospital settings. These options not only cost less, they are less disruptive to the patient and often safer.

To treat people so they don’t need to enter a hospital means to develop insight into what patients need as early on as possible and then to provide timely treatment and interventions that prevent escalation of treatment and costs.

Mount Sinai and others – Handmaker mentioned Orlando Health in Florida and Bon Secours Medical Center in Virginia – are not just examining electronic healthcare records but pulling together data from many sources, whether clinical, claims-related, or even self-reported, to anticipate what could go wrong. That can be combined with demographic data, population health management, and follow-up after hospital discharges to assess their understanding of instructions and medications to reduce both admissions and readmissions.

Such programs make more sophisticated use of data analysis and IT than car providers have in the past. But to meet growing needs, demands for better care, and increased pricing pressure, executives will have to do all this and more to keep their organizations competitive and fiscally healthy.

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