Better Solutions for Healthcare

Modern Healthcare: Cost containment is a top priority among health system executives

Cost containment is a top priority among health system executives
Modern Healthcare
July 11, 2018

When Rob Lazerow, a managing director at the Advisory Board Co., recently met with the executive team of a large health system, he noticed a construction project had been downsized from the prior year.

The organization decided to replace its aging facilities with smaller structures, which would potentially allow it to fine-tune its staffing model and reduce its inventory of excess supplies.

This development reinforces findings from the Advisory Board’s 2018 annual survey of healthcare CEOs, which discovered that cost control has become a top priority for 146 executives surveyed between December 2017 and March 2018.

While interest in revenue growth remains high, cost structure and management were the top concerns among health system executives, according to the survey.

Nearly two-thirds reported that preparing the organization for sustainable cost control was their top aim, followed by adopting innovative approaches to expense reduction and diversifying revenue streams. Half of those surveyed said their top goal was to boost outpatient market share and meet new consumer demands.

The survey indicates that hospital leaders don’t think they can grow their way out of margin challenges, Lazerow said. There is more urgency to control costs as margin pressures intensify, he said.

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