Top Reasons to Prioritize Healthcare Operational Efficiency

Key Takeaways:

Operational efficiency is crucial for managing rising healthcare costs, meeting patient demand, and sustaining financial stability.
Effective workforce management and technology integration improves patient outcomes, streamlines processes, and reduces burnout.
Optimized case management, clinical documentation and revenue cycle processes are essential to maximize reimbursement and maintain regulatory compliance.

With increased patient demands due to an aging population, staffing shortages in nursing and other specialized medical fields, as well as continued challenges in tightening reimbursement, hospitals and health systems operating efficiently are a major need. There are many factors that organizations can focus on to be more efficient but the below highlights top areas we encourage healthcare organizations to be mindful of and address to maintain sustainability.

Key Drivers for Prioritizing Healthcare Operational Efficiency

1. Rising Healthcare Costs

Healthcare costs continue to increase globally, putting pressure on hospitals to deliver high-quality care while managing limited resources. Efficient hospital management helps reduce waste, optimize the use of resources, and control operational expenses, which is essential for financial sustainability.

2. Increasing Patient Demand

With aging populations, chronic disease prevalence, and advancements in medical treatments, patient demand for healthcare services is rising. Efficient hospital operations ensure that the facility can treat patients at the appropriate level of care, manage patient throughput, reduce wait times, and improve patient satisfaction.

3. Healthcare Workforce Management

The healthcare industry is facing staffing shortages, especially in nursing and specialized medical fields. Efficient workforce management, including staff scheduling, training, and retention, is critical for maintaining service quality. Inefficiencies can lead to burnout, higher turnover rates, and a decrease in patient care quality.

4. Maximizing Reimbursement

Payors are continuing to tighten hospital margins and make it more difficult to receive appropriate payment for care provided. Efficient revenue cycle processes that establish strong performance from patient-friendly front-end registration, to justifying care provided with strong clinical documentation programs and back-end account follow-up and denial management programs, are a key necessity for success.

5. Regulatory and Policy Requirements

Hospitals are subject to various regulations, such as those related to patient safety, healthcare outcomes, and data security. Efficient management ensures compliance with these regulations, avoiding penalties and maintaining accreditation. Moreover, government policies often incentivize hospitals to be more efficient by linking reimbursement to performance metrics.

6. Improving Patient Outcomes

Efficiency in hospital management directly impacts patient care. Reducing delays in treatment, improving coordination among healthcare teams, and minimizing errors all contribute to better patient outcomes. Efficient management ensures that healthcare providers can focus on delivering the best possible care.

7. Reputation and Competitiveness

In a competitive healthcare market, a hospital’s reputation for efficiency can attract more patients, partnerships, and funding. Hospitals that are known for timely, high-quality care, and cost-effective operations often outperform their peers. Efficiency enhances patient experience and loyalty, contributing to a hospital’s long-term success.

8. Advances in Technology

Technology, such as electronic health records (EHRs), telemedicine, and AI-driven diagnostics, has revolutionized healthcare delivery. Efficiently integrating and using these technologies in hospital operations can improve patient outcomes, streamline administrative tasks, and reduce errors. Conversely, inefficient management can lead to underutilization of technology, poor data handling, and increased operational costs.

9. Preparedness for Public Health Emergencies

Events like the COVID-19 pandemic highlighted the importance of hospital efficiency in handling crises. Efficient hospitals can quickly adapt to changing circumstances, allocate resources effectively, and respond to surges in patient demand during public health emergencies.

As can be seen above, managing hospital efficiency isn’t just about dollars and cents. To be a differentiator in the market today, hospitals must achieve and maintain high-quality care while meeting the growing demands of patients, payors and regulatory bodies. Efficient hospitals are better equipped to handle the challenges of modern healthcare, maintain financial stability, and improve overall patient satisfaction and outcomes.

Use Case: Case Management, Clinical Documentation Integrity and Revenue Cycle Transformation

A nonprofit healthcare system reached out to LBMC to address the following pain points:

Declining cash position driven by troubled revenue cycle performance,
Weakening reimbursement due to suboptimal clinical documentation and lower-than-expected case mix index,
Disruptions in access and capacity attributed to increasing avoidable care days and observation utilization,
Decreasing staffing levels and ability to replenish staff brought about by the economic decline in the region’s primary industry leading to the relocation of skilled professionals from the region.

LBMC worked with the healthcare system to tackle these challenges with the following solutions: Case Management, Clinical Documentation Integrity and Revenue Cycle Management.

Case Management:

Drove frontline process improvement and supporting staff education,
Implemented standardized multi-disciplinary rounds across all 14 facilities,
Developed redesigned team including department leadership and staffing structure to enhance efficiency and outcomes,
Performed standardization of system-wide processes and expectations around utilization review, transition planning, denial management and physician advisor utilization,
Established system and facility-specific goals and benchmark targets,
Implemented standard system, facility and department dashboards

Clinical Documentation Integrity:

Completed redesign of Clinical Documentation Integrity program staff model and creation of standard review expectations
Established system-wide processes around account escalation
Designed and implemented a physician champion program for Clinical Documentation Integrity

Revenue Cycle Management:

Implemented a redesigned revenue cycle structure supporting enhanced ownership of processes at facility and centralized business office locations,
Established an enhanced productivity monitoring system for all revenue cycle staff which included a view into daily accounts receivable (AR) worked versus outstanding AR to facilitate a greater understanding of the impact of each team member’s work,
Developed standard work processes, key performance indicators (KPIs) and associated targets in support of transitioning to a high-performing revenue cycle program.

In partnership with LBMC, our nonprofit healthcare system client successfully reduced the average length of stay by more than one full day, exceeding the client leadership’s target of a 75% improvement.

Our combined efforts helped improve the performance of their CDI program by 20%, contributing to a $3 million enhancement. Additionally, they boosted the annualized net collection rate by 8 basis points, bringing it to 98%. They also helped cut claim rejections in half, saving approximately $37 million and reduced credit balances by 40%. These results showcase the tangible impact of LBMC’s tailored approach in driving both operational and financial improvements.

Strengthening Healthcare Operations Through Strategic Efficiency

Operational efficiency is critical for hospitals trying to provide quality treatment while negotiating budgetary and regulatory constraints. From revenue cycle management to workforce optimization, the focus on effective processes—from which patient outcomes and organizational resilience are enhanced—has been indispensable.

Understanding this complexity, LBMC works with healthcare companies to create and execute plans that squarely address current issues. Our work with clients who achieved significant operational and financial gains clearly shows that our tailored solutions in case management, clinical documentation, , and revenue cycle efficiency have frequently produced noticeable results.

LBMC offers a strategic alliance tailored to your success for healthcare providers seeking to increase patient satisfaction and efficiency. Contact our team to look at how we could help you streamline procedures, reduce costs, and strengthen the foundation of your facility for the future.