Ways Hospitals Are Cutting Administrative Costs

4 ways hospitals are cutting administrative costs part 1: Hiring more people

Four ways hospitals are cutting administrative costs: Part 1

Healthcare is becoming increasingly unaffordable – for patients, payers, and providers. And while there are many interrelated factors contributing to the problem, no one can deny that administrative costs have become unsustainable – the latest research has put the total cost of healthcare administration at $1.1 trillion dollars and growing. 

So how can hospitals and healthcare systems work to reverse this trend, helping not only their own financials but also the industry as a whole? 

In this blog series, we are going to take a look at four of the ways healthcare organizations are tackling their most costly administrative challenges. In this first part of the series, we are examining the strategy of hiring more administrative employees to handle the growing workload.

Why hiring more people to solve the growing healthcare administrative problem is unsustainable

As the mountain of paperwork and administrative work increases, many healthcare systems hire additional employees or shift employee time to managing these repetitive tasks. But when your healthcare system grows, the administrative workload increases with it, and more and more employees are needed to handle the burden.

Not only does each employee add to your payroll costs, but there are other, more hidden, costs as well. Much of these administrative tasks are simple data processing – copying data from one screen or system into another. As employees become little more than data routers instead of valued contributors to organizational success, the inevitable human error that occurs in these processes lead to costly rework and even more time spent on administration. 

Back office employees know that administrative work is part of their job, but it extends to the front line of care as well. Doctors, nurses, and other clinical staff are spending increasing amounts of time on data entry and less time with the people who matter most – the patients. It’s no surprise that in this environment, healthcare employees feel burnt out and hospitals are struggling with turnover.

Low morale, high churn, and unfilled positions hurt your financials and result in lower quality of care. And as you lose employees and struggle to hire new ones, the backlog of administrative tasks continues to grow, leading to a vicious cycle. Without a strategy to actually reduce time spent on administration, hiring more people does not address the root problem. But if hiring more people doesn’t work, what are other solutions to the problem of cutting costs? 

You can check back in with us next week for Part 2 of the series, where we’re going to discuss innovative technologies that healthcare systems are leveraging. Want more information now? Read the eBook 6 Ways to Cut the Staggering Cost of Healthcare Administration to learn how others are tackling the growing healthcare administrative burden.

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