The Patient Protection and Affordable Care Act (PPACA) is now the law of the land in the United States, having been upheld by the Supreme Court last June. Your hospital may face an uncertain future with looming shifts in patient populations, regulations, and reimbursement. This trickles down to the bench as a mandate to provide truly affordable care, and that means reducing cost. There's plenty you can do, starting today.
Here to Stay
From your CEO to your laboratory manager, the Affordable Care Act -- sometimes called Obamacare -- will have broad impact. By providing health insurance for 30 million Americans who are not currently covered, including elimination of current limits and coverage denials, the law promises to rebuild the healthcare landscape.
The benefits are big for many underserved populations, eliminating barriers to receiving healthcare. Greater access to services that emphasize preventative care will free emergency rooms, and requiring health insurance will level the field. "We think our reimbursement will actually go up because we'll collect a little bit better when someone finally has coverage," the CEO of one private hospital told reporters recently.1 There's plenty of room for cautious optimism.
But for bench techs working in an industry already facing labor shortages, the Affordable Care Act can add uncertainty. Will greater access to services increase volumes and revenues, or will there be a shift away from hospitals to community health centers? Will reimbursement changes force hospitals to cut staff, eliminate services, outsource departments, or merge to survive? The big question: will I lose my job in 2013?
Such worries can leave you feeling powerless to affect the big picture that you're still a part of. Whether you feel happy, angry, or confused about these changes, they are here to stay.
Types of Cost
To do your part to provide more affordable care, you need to understand what kinds of cost you can reduce to increase productivity. Working more efficiently by reducing cost helps your laboratory survive during this problematic period of uncertainty and makes you part of the solution.
Generally, business costs are fixed and variable. Fixed costs are the same whether your laboratory performs 100 tests or 1000 tests; typical fixed costs are rent, utilities, and to an extent salaried employees. Fixed cost is out of your control. Variable costs, by contrast, are directly related to production and include the labor and material used to perform laboratory testing; typical variables are reagents, supplies, personal protective equipment, and other materials used.2 Variable cost is within your control.
Some are both, also called mixed or semi-variable cost. Examples include electricity and telephone bills, in which the total cost is directly proportional to activity. The fixed portion is the minimal cost to have the service available; the variable cost relates to the amount consumed.3 Laboratory examples of mixed cost include equipment maintenance and use of cold storage. Thus, mixed cost is also within your control.
Nonprofit businesses such as hospitals generally reinvest profit (e.g. revenue for laboratory testing) into its services or programs, in addition to outside funding. Laboratories are dependent on inpatient census, physician referrals, and outreach opportunities to generate revenue. In many cases, the only way to significantly alter the revenue to expense ratio -- and, perhaps, keep your doors open -- is reducing variable and mixed cost. That's where you come in.
At the Bench
Variable and mixed cost are also directly related to how efficiently you work. Every test tube, every pair of gloves, and every entry into the reagent refrigerator adds to the cost. Reducing waste and improving efficiency intuitively increases the revenue to cost ratio.
Here are ideas to get you started providing more affordable care today:
- Maintain instruments. A properly maintained instrument is cheaper to run and lasts longer, perhaps beyond its lease. It also means less work for coworkers who need to troubleshoot instrument problems.
- Track waste. It's a good idea to keep a log of expired materials or wasted materials that are discarded, clear opportunities for process redesign.
- Avoid needless work. It can seem helpful to run tests "just in case," such as extra crossmatches or chemistry panels, but this is an expensive excuse for an inefficient process. Concentrate on designing workflows for rapid rather than defensive testing.
- Consolidate work. Specimen processing and information system access are two tasks commonly duplicated. Consolidating these kinds of areas can save time and electricity. Gadgets such as KVM switches can consolidate multiple computers, for example.
- Limit calibrations and other expensive troubleshooting. Learn your quality control review procedures and make sure you understand how to access run charts to assess outliers. Avoid knee-jerk responses to QC problems, and encourage coworkers to follow suit.
- Limit trips to cold storage. Trips to refrigerators and freezers cost you ergonomically and in electricity. Arrange your workflow to minimize inventory handling.
- Limit overtime. Payroll is often the first expense administrators are willing to cut, because it is a monthly expense. Make a plan to reduce your overtime where possible to help.
- Limit meetings. Meetings can be a waste of time if that time can be used for more efficient work. Instead of lengthy meetings, offer to initiate daily or weekly huddles designed to focus on reducing cost and eliminating waste.
Finally, ask your manager how you can help. Ask to be included in the "big picture" of finances and offer support. Your manager may be under the gun to reduce cost quickly, and any assistance you give will likely be appreciated. Insist that your team focus on what the Institute for Healthcare Improvement calls "dark green dollars" that translate into real savings as opposed to "light green dollars" that are theoretical e.g. we bring on this lab test and the length of inpatient stay is shortened.4
Documenting and celebrating your success enhances your reputation as a valuable employee. Focusing on reducing waste and improving efficiency, starting today, will give you more time to provide quality results leading to better, more affordable patient care.
- Coffin C. It's here to stay: how the affordable care act will impact our healthcare system. Available at: http://www.krextv.com/news/around-the-region/Its-Here-to-Stay-How-the-Affordable-Care-Act-will-Impact-Our-Current-System-180068991.html. Last accessed: 12/1/12.
- Reference for Business. Costs. Available at: http://www.referenceforbusiness.com/small/Co-Di/Costs.html. Last accessed: 12/2/12.
- Accounting for Management. Mixed cost or semi-variable cost. Available at: http://www.accounting4management.com/mixed_costs.htm. Last accessed: 12/2/12.
- Institute for Healthcare Improvement. Increasing efficiency and enhancing value in healthcare: ways to achieve savings in operating costs per year. Available at: http://www.ihi.org/knowledge/Pages/IHIWhitePapers/IncreasingEfficiencyEnhancingValueinHealthCareWhitePaper.aspx. Last accessed: 12/2/12.