The Organization for Economic Cooperation and Development has estimated that roughly 20% of global health expenditure is wasted. Estimates in the United States range from 15% to 30%. Much of this waste stems directly from inefficient processes, such as manual, error-prone workflows for submitting insurance claims. And some of it is indirect, such as redundant medical tests needed because care teams can’t share patient information in a timely manner.
Improving processes through automation, technology adoption, streamlining workflows and collaboration can all make a difference for efficiency, productivity and patient care.
What Does Efficiency Mean in Healthcare?
Efficiency in healthcare means delivering high-quality care and improving patient outcomes while minimizing waste and reducing costs. There are two key elements to efficiency in healthcare. One is technical efficiency, which refers to using the fewest necessary resources to achieve a desired outcome. These resources could be bandages to cover a wound, physicians to diagnose or medications to treat a condition. Though high resource use may be necessary in certain complex circumstances — a heart surgeon is unlikely to count pieces of gauze used during a transplant — organizations strive to avoid instances of preventable waste.
The other element is allocative efficiency, which refers to how those resources are distributed to produce a given outcome. Resources may be allocated to hospital, outpatient, specialty or primary care facilities in different amounts relative to factors such as availability, demand or need. A pediatrician’s office will stock different medical supplies than a physical therapist; both may have different technology systems and staffing levels as well.
Key Takeaways
- In healthcare, efficiency is a matter of using the necessary resources in the optimal care setting at the right time to provide the appropriate level of care.
- Improving efficiency enables healthcare organizations to provide more care to patients in need and better respond to external pressures.
- Key steps to improve efficiency include streamlining workflows, automating processes, implementing technology and enabling collaboration.
- Organization-wide insight is essential for tracking key performance indicators and aligning efficiency improvements with business objectives.
Healthcare Efficiency Explained
In healthcare, efficiency is a matter of providing the right level of care using the right resources in the right care setting at the right time. A tall order on its own, efficiency is further complicated by healthcare industry challenges such as provider shortages, concerns about inequitable care delivery and increased utilization of standalone telehealth and urgent care services.
Efficiency can also be difficult to achieve because demand for healthcare services is elastic and unpredictable. The need for clinical staff increases dramatically in the aftermath of a natural disaster, for example. Inefficiency is further exacerbated by historically manual workflows throughout healthcare, including submitting insurance claims, sharing clinical information and verifying room sanitation. These workflows force clinical and administrative staff to make phone calls and send faxes instead of focusing on patient care.
Why Is Efficiency in Healthcare So Important?
Efficiency helps healthcare organizations offer patients access to the care they need when they need it. Efficiency matters in healthcare for several important reasons:
- Greater efficiency means quality care becomes available to more patients, including those who may previously have been unable to access care.
- Reducing waste can lead to more sustainable spending, improving healthcare financial management and better positioning organizations to respond to economic downturns or other external pressures.
- Demonstrating improvement in efficiency and care quality can result in financial incentive awards from state or federal health agencies.
- Completing administrative tasks faster gives clinical staff more time to spend with patients, helping build trusting relationships that improve clinical outcomes.
- More effective resource allocation helps organizations meet changing patient expectations and address shifting patterns in disease burdens, especially as their patient populations age.
How to Measure Healthcare Efficiency
Numerous key performance indicators (KPIs) can shed light on a healthcare organization’s efficiency. Some are directly related to clinical operations, such as average length of hospital stay, average patient wait time or hospital room turnover time. These help to pinpoint areas where bottlenecks may contribute to inefficient care delivery. Metrics such as staffing ratios or medical equipment use rates may indicate over- or under-utilization of resources, while KPIs such as medical error rates or readmission rates may suggest a need to improve care quality.
Metrics associated with nonclinical processes may also point to potential inefficiencies. These include revenue cycle management KPIs such as claims processing time, claims denial rate and accounts receivable turnover. In addition, human resources and business line leaders may want to track training resources allocated to and used by each department. Access to training helps keep staff updated on new technology systems and office policies, enabling them to work more efficiently while remaining committed to high levels of care delivery and service.
12 Strategies to Improve Efficiency in Healthcare
As there are so many opportunities to improve efficiency in healthcare, organizations should spread their efforts across multiple areas. Strategies such as implementing technology, standardizing and simplifying business processes, improving communication and strengthening training are all effective starting points. Organizations should also track progress to confirm that their hard work leads to measurable improvement.
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Use technology:
It’s no secret that manual processes in healthcare are inefficient and error-prone. Plus, those errors lead to further inefficiency, ranging from redundant service delivery to claims appeals. Technology can simplify communication and data collection, automate business processes and even predict potentially adverse events before they happen. Adopting an enterprise resource planning (ERP) system for healthcare ensures technology tools can readily exchange data and provide visibility into operational performance throughout the organization.
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But streamline technology solutions:
Adopting technology is essential, but too many tools canbe a drain on resources. A 2022 survey of healthcaretechnology leaders found that 60% of respondents use atleast 50 different “point” solutions to manageoperations, with nearly 90% reporting that multipledisparate systems made their job more difficult.Consolidating and integrating solutions allowsorganizations to improve consistency and efficiency whilereducing costs.
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Standardize processes:
Abundant healthcare business processes before, during and after a patient encounter could be improved by standardization. Consider how the organization reminds patients about an upcoming appointment, guides patients through the facility during visits and how the bills patients and insurers. Or, consider nonclinical tasks such as procurement or IT support. The more these processes are standardized according to industry guidelines and automated when possible, the more efficient they’ll become.
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Optimize workflows:
As organizations begin to standardize processes, they should reassess the workflows that make up the processes. Reviews, approvals or other tasks that may create bottlenecks should be streamlined, automated or even eliminated when best practices and regulations permit. Consider changes carefully, though; if a workflow changes in the name of efficiency but adds mouse clicks, it’s likely to have the opposite effect — particularly in a clinical setting.
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Improve communication:
Patients often receive care from multiple physicians at different facilities. Communication is critical for accuracy in diagnosis and treatment. It also helps prevent delays and redundancies, such as a second X-ray ordered because a physician hasn’t seen the first. Modern tools such as SMS messaging, coupled with workflows to support data sharing in electronic health record (EHR) systems, can make communication and care delivery more efficient and effective.
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Increase collaboration:
Enhanced communication supports better collaboration. This can improve efficiency patient-by-patient, as care teams become more aware of patients’ diagnoses and treatment plans. This greater awareness enables informed decision-making in the moment, reducing the likelihood of duplicative or unnecessary tests. Good collaboration also creates more opportunities for clinicians to share their observations and discuss broader improvement opportunities, such as more efficient processes for transferring patients to new units.
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Train and develop staff:
Routine training helps healthcare staff build technical and soft skills to better meet patient needs. Training should cover everything from industry best practices to unique office policies. It should be offered frequently, both to accommodate the busy schedules of clinical staff and to ensure everyone is up to date on technology, legal and policy changes. Wherever possible, train staff above and beyond their traditional role; that way, they can step in when colleagues are absent and operations aren’t adversely affected.
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Reduce waiting times:
Long waiting room times result in fewer billable visits over the course of the day and decrease the likelihood patients will come back. Technology and policy changes can help here. Digital tools for intake and check-in can capture key information about insurance and medical history before patients arrive. Meanwhile, well-communicated and enforced late arrival and no-show policies can clear calendars for patients who do arrive on time. Finally, implementing patient messaging or telehealth technology can reduce the need for in-person visits overall.
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Simplify billing and payments:
A recent survey found that fewer than 30% of Americans pay medical bills immediately. While affordability is a common concern for patients, the complexity of bills and a lack of convenient payment options also pose problems. Organizations can address this through workflow automation, from assigning billing codes to sending bills to collecting payments. An omnichannel approach that gives patients many options for how to pay can reduce missed payments and improve revenue capture.
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Optimize facility layout:
Staff and patients spend much time moving through healthcare facilities. Clear signage directs patients effectively, while well-planned layouts can guide patients efficiently from the waiting room to examination, checkout and the lab without backtracking. Stocking supplies and workstations in exam rooms gives staff the equipment they need without having to leave patients or page colleagues.
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Implement performance metrics:
Many organizations define and track KPIs for financial needs such as budgeting and forecasting. The same approach can be applied to efficiency. Here, KPIs may include measures of waste reduction, patient flow improvement, wait time reduction, care quality enhancement, employee training and expense cutting. It’s important to tie KPIs directly to business goals, as this improves accountability and indicates the value of the KPI to front-line workers. But it’s difficult for healthcare leaders to track KPIs and recommend process improvements when data from multiple business units remains in silos. To truly move the needle on improving efficiency, healthcare organizations can explore how integrated ERP systems can unify their information.
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Monitor, report and iterate:
Monitoring KPIs and reporting on how they change over time is one way to prepare organizations for continuous improvement initiatives. Another is to gather feedback from both staff and patients on the effectiveness of clinical and operational processes. This can be done through surveys, interviews and focus groups. Organizations must be prepared to accept the constructive criticism they receive and be equipped to implement necessary changes.
Maximize Efficiency and Productivity With NetSuite
Efforts to increase efficiency in healthcare depend on the work of many interdependent business units. Improving patient transfers, for example, may require input from the emergency department, the intensive care unit, the custodial staff and orderlies. It may also involve the imaging centers and labs whose test results often determine a patient’s prognosis, the IT teams that manage communications software and the facilities department that maintains the flow of individuals through the hospital.
This is where NetSuite ERP, specialized for healthcare and life sciences, becomes crucial. NetSuite can help healthcare organizations extract and share data from previously disparate clinical and business applications. It can provide health system leaders unprecedented insight and transparency into operations, empowering them to make data-driven decisions to ensure efficiency improvements. With NetSuite, healthcare organizations can enhance their operations by automating processes that have traditionally depended on manual handoffs from different business units. This optimization of workflows leads to improved productivity and efficiency, ultimately allowing workers to dedicate more time and resources to the mission of delivering high-quality care to those in need.
Inefficiency is a major challenge in healthcare. It touches a wide range of clinical, administrative and operational processes, and it leads to increased spending on care delivery, staff utilization and/or other services. Addressing inefficiency requires a multifaceted strategy. It includes workflow optimization, technology utilization and collaboration, along with tracking KPIs to monitor the impact of process improvement initiatives. To ensure success, leaders need visibility across the organization to help identify bottlenecks and other slowdowns. They also require the right technology tools to address these inefficiencies effectively.
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Efficiency in Healthcare FAQs
How do businesses increase healthcare efficiency?
Organizations can increase healthcare efficiency through steps such as automating manual workflows, standardizing common business processes, enabling collaboration among clinical care teams and training staff on how to be more productive in their roles.
What makes an efficient healthcare system?
An efficient healthcare system is one that provides the right level of care using the right resources in the right care setting at the right time. There are two factors in achieving this: Technical efficiency involves using the fewest resources, while allocative efficiency is about distributing the right resources to the right place at the right time.
What is an example of efficiency in healthcare?
An example of efficiency in healthcare is moving a patient from the emergency department to the intensive care unit (ICU) without having to wait because the ICU room is already clean and vacant, the transport staff are available to move the patient and the care teams in the ICU are ready to see the patient.
How to improve efficiency in clinical operations?
Adopting technology that helps clinical care teams communicate and share information can improve efficiency. It enables data-driven decision-making at the point of care, reducing patient wait times for diagnoses and treatment plans. In addition, technology that automates processes such as taking notes or submitting claims gives clinical teams more time to spend providing direct patient care.
