5 Opportunities for Health Systems to Increase Margins

May 9, 2022

5 Opportunities for Health Systems to Increase Margins

Leaders in health systems know cost savings are critical to maintaining the margins needed to maintain your mission. Deloitte’s strategic guidance for healthcare executives charged with improving margins is to transform digitally, with two cost imperatives:

  1. Increase system efficiencies beyond what is needed to be profitable.
  2. Operate as a consolidated system.

Using Automation to Increase Margins

Automation of the touch points throughout the customer and patient experience is a necessary component of the digital transformation, and will lower the cost to serve. But automation that lowers cost should also address staff burnout and lead to better health outcomes.

What opportunities for direct savings should an automation of the patient and customer journey address, while also lowering burdens on clinicians and providing better outcomes? Here are five opportunities:

  1. Free up nurses with AI triage.
  2. Reduce call center queues with voice automation.
  3. Provide interactive voice response phone system redirection.
  4. Help patients and caregivers after discharge by engaging them in their own health and preventing unnecessary readmissions.
  5. Help patients navigate transitions of care by directing to the most appropriate venue and then supporting them in that environment.

With 2022 off to a difficult start for most providers due to lower volumes resulting from the Omicron variant, and as labor costs increase and non-labor costs spike with no end in sight, the need to prioritize savings is high.

According to the latest Kaufman Hall research, expenses per adjusted discharge in February rose 10.4% over the same period in 2021, and a whopping 30.7% higher than the same period in 2020. Labor costs were up 15.3% versus 2021, and 32% compared with 2020. Non-labor expenses were up 8% over February 2021, and up 25.8% higher than February 2020. Drug expenses were up 40.6% over the same month in 2020.

Meanwhile, inflation is at the highest levels in 40 years, with the Consumer Price Index at 7.9% YOY, its highest reading since February 1982.

Leading health systems are tackling the need to lower costs as part of an enterprise-wide automation strategy, but many providers aren’t out of the gate, with 41% of hospitals still in the planning stage, and only 25% in the implementation phase.

Systems that need help getting out of the gate should understand that not all automation solutions are the same.


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