Who has the answers to reducing healthcare costs?
By Mike Wokasch

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Not the government, not insurance companies, not hospital administrators. Nope. It's you, the healthcare providers. You see stuff everyday that makes no sense, is costly and takes creative rationalization to justify. You see the 10-page patient self-assessment and medical history filled out on every visit. You probably scratch your head at orders for the laundry list of diagnostic testing or the 15 prescriptions you are filling for the 86-year-old grandmother. How about the inexplicably high prices (and markup) you know the hospital, clinic or pharmacy are charging for the care being providing?

You say it must be because of the "high overhead costs" or because "it's what insurance will pay." Then frustration sets in when you read about the seemingly exorbitant million-dollar executive salaries and their huge bonuses (that you helped them earn), which could easily fund a more appropriate level of patient care staffing (e.g., nurses and pharmacists).

INDUSTRY PULSE

Who should be responsible for reducing healthcare costs?
  • 1. Federal government
  • 2. Insurance companies
  • 3. Healthcare administrators
  • 4. Healthcare providers

What's the point? Frontline healthcare providers have more practical answers to reducing the cost of healthcare than any executive, agency, committee or consulting firm. So why don't these suggestions, recommendations and great ideas ever get solicited and considered? There are two groups of healthcare providers: those who are in a position to make and implement the changes and the frontline (nonexecutive) healthcare providers closest to delivering patient care.

Healthcare providers who can make and implement the changes are often in a position of power where cost-saving changes could negatively affect organizational financial performance (show lower revenue). Any negative financial performance would subsequently also affect their personal financial well-being (think executives, department heads and specialists).

These decision-makers may feel the only way to deliver financial results (revenue growth) for their hospital or clinic is by "providing more care" whether it is really needed or not. Therefore, their cost-saving initiatives usually start with, and are often limited to "doing more with less," which translates to reducing or eliminating patient care staffing while increasing patient loads and ordering more procedures.

On the other hand, you have the majority of healthcare providers who are closest to patient care and have the majority of good ideas for reducing healthcare costs. Unfortunately, these people often feel helpless (powerless when it comes to implementing any change) or even at risk (retaliatory dismissal) when it comes to suggesting change. Also, as mentioned in a previous article, reducing healthcare costs means jobs will be at risk and admittedly, some of these same people may also realize their own position or job function could be eliminated or could be done more efficiently with fewer people.

Therefore, you have two groups of people threatened by change and rewarded for protecting, maintaining and building upon the status quo. If we as a society want to reduce healthcare costs, incentives must be in place to challenge the status quo and to seek the insights from frontline patient-care providers without reprisal. When decision-makers are incentivized to take cost out beyond just eliminating positions and frontline patient-care providers feel safe and become a valued part of the process, we will find plenty of ways to reduce healthcare costs.

Mike Wokasch, a pharmacist by training, is a 30-year pharmaceutical industry veteran, having held a number of positions of increasing responsibility at several large pharmaceutical companies including Merck, Abbott, Chiron, Bayer and Covance. Wokasch was also an executive at several technology-based companies including Promega, PanVera and Aurora Biosciences. He is the author of the book, "Pharmaplasia," which explores the changes needed in the pharmaceutical industry as it adapts to healthcare reform.