Ten Practices For Increasing Hospital Profitability: Tip #4

Continuing the discussion on practices that will increase your hospital's profitability, today I want to comment further on physician involvement. Yesterday I talked specifically about surgeons, but you must involve all your key physicians in these areas to maximize your profitablilty.

Tip #4: Involve physicians in cost reduction efforts

There are many other areas besides surgery where physicians can play a key role in helping the hospital reduce costs. Conversely, physicians who are not at all aligned with the hospital can prove to be very costly. I have seen this more often than I care to admit throughout my career. The key is to build mutual benefits for the hospital and physician for cost saving measures. Remember that the physician's pen is the most expensive instrument used in your hospital. Efficiency in ordering tests can save millions over a year while thorough documentation to maximize coding can add millions in collections.

Many hospitals do not properly engage physicians in the cost reduction process. There may be an assumption that physicians strictly follow their own interests and will not be flexible to consider benefits to the hospital. For some physicians this may be true but it is not a valid assumption for dealing with the entire medical staff. The hospital can not make major changes in supplies and equipment without involving physicians. There may be reasons beyond the clinical ones why an orthopedic surgeon demands a particular brand of implant and changing may make great clinical sense. But it must be done with his or her involvement and eventual endorsement of the switch. It is amazing how negotiable pricing from vendors becomes if they do not have the physician lined up to boycott any product but theirs.

The same holds true for developing patient care protocols designed to standardize treatment thus benefiting the patient and saving costs from unnecessary tests. These can not be just imposed, but must be developed with the involvement of key physicians with peer review followup for those physicians who refuse to go along.

There must be incentives for the physicians beyond "this is good for the hospital". In a true partnership they will benefit as well. With the trend swinging back to more hospital employed physicians and inpatient care being done by hospitalists, it is much easier now to align incentives than it was a few years ago. Physicians are your partners. Treat them that way.

More on profitability practices on Monday.

Mark Brodeur