Hospitals offer roadmap to cut healthcare costs: Five strategies

Hospitals have been facing criticism from lawmakers about rising costs for healthcare, but they are also offering some of their own ideas for reducing costs.

The American Hospital Association released a new report Tuesday with suggestions for reducing the costs of healthcare. The report is titled “Making Health Care More Affordable: A Blueprint to Lower Costs, Improve Access and Enhance Quality.”

Rick Pollack, president and CEO of the American Hospital Association, says the entire industry needs to work together to make care more affordable.

“As the backbone of our health care system, hospitals and health systems are committed to delivering high-quality, accessible and affordable care in every community. But hospitals cannot solve affordability alone,” Pollack said in a statement.

“It will require everyone, drug companies, commercial insurers, suppliers, government, patients and others, to fix our outdated system. The strategies outlined in this report are actionable, achievable steps that can help lower costs and strengthen access to care for Americans across the country,” he said.

The report comes as members of Congress have offered sharp criticism of hospitals about the costs of healthcare, with lawmakers in both parties calling for hospitals to do better. Hospitals have pointed to inadequate reimbursements from Medicare and Medicaid, rising costs, and increased delays and denials from insurers.

With its new report, the hospital association outlines two dozen steps to reduce costs. But the report outlines five core strategies.

More primary care and prevention

While hospitals are largely focused on acute care, the association says investing in primary care, mental health and maternal care would help reduce costs and keep people healthier. The AHA calls for better partnerships with providers and communities, and suggests AI and telehealth could help expand access.

As the report notes, the U.S. ranks among the world leaders in some unenviable categories, including rates of obesity, diabetes and mental health conditions. Keeping people healthier would keep people out of hospitals and lower costs.

But hospitals also say policymakers should explore tax code changes to prevent Americans from being wiped out by catastrophic bills.

Transform the delivery of care

The healthcare industry has too many inefficiencies in care delivery and payment incentives placing greater incentives on volume over value, the report says. The association is calling for a greater acceleration toward value-based care.

The AHA calls for strengthening Accountable Care Organizations and reforming medical malpractice laws to protect providers following sound medical practices. The association also calls for knocking down barriers that prevent doctors, and hospitals from working together in integrated teams and clinical networks by revamping anti-kickback laws.

Cutting administrative waste

Hospitals say getting rid of unnecessary and redundant regulations and documentation requirements would go a long way toward cutting costs. The report says coming up with standardized processes for submitting information to process claims and improving the prior authorization process, long a sore point for hospitals, would also make a big difference.

Lowering drug prices

Hospitals say policymakers need to crack down on patent manipulation by pharmaceutical companies. Health systems say there should be greater incentives for patients to use cost-effective drugs, and the association says hospitals are taking steps to make drugs less costly by managing formularies carefully and using biosimilars and generics when clinically appropriate.

The association also calls for using the federal 340B Drug Discount Program to help patients in vulnerable communities. Some members of Congress have complained that the 340B program has grown beyond its intended purpose of supporting safety-net hospitals, but health systems say the program provides essential assistance.

Better outcomes with innovation

Advanced screening and predictive analytics can help lower costs, and the report calls for expanding access to those tools. AI-assisted imaging and genomic testing can help patients detect serious illnesses before they become life-threatening conditions, and can also help avoid costly hospital stays.

The report also suggests greater use of digital tools to reduce hospital readmissions, infections, and complications, such as sepsis, to help protect patients and drive down costs.

In addition, the hospital association is also calling for payment structures to support home hospital programs and remote patient monitoring.