Hospitals Overspending on Corporate Services, Could Reduce Costs Without Impacting Quality

2020 HFMA/Navigant, a Guidehouse Company, Corporate Services Trends Survey

Seventy-five percent of provider executives think their corporate services spending could decrease – 36% of them suggesting reductions of 10% or more – without negatively impacting quality or efficiency, according to a survey from HFMA and Navigant, a Guidehouse company.

Results from the survey of 114 hospital executives also show:

  • More than half of execs say they’ll be held accountable for reducing corporate services budgets (29%) or holding them flat (26%) over the next year. To do so, they’re targeting revenue cycle management (23%), supply chain (20%), and IT (19%) expense reductions.
  • Providers lag other industries in leveraging IT and automation of back-office functions through RPA and ERP:
    • Just 15% of providers have automated their corporate services functions.
    • While 32% of providers have deployed an ERP system, only 12% have optimized them. Moving forward, 51% of providers predict they’ll deploy or optimize their ERP over the next 2 years.
Healthcare 2020 Corporate Services Report from Guidehouse

Revenue growth remains a constant challenge for hospitals and health systems due to such aspects as stagnant reimbursement and meager inpatient growth, prompting many providers to grow inorganically via M&A while targeting corporate services for meaningful cost reductions. This economic reality requires providers explore creative opportunities to simplify and streamline a complex organizational structure while consolidating, automating, and outsourcings functions to drive more efficient and effective corporate and shared services delivery.

Robert T. Green, Partner and leader of Guidehouse’s Corporate Services Peer Network and Database, comprised of 55 health systems nationwide

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