Woman’s Hospital (Woman’s) was facing increasing costs and needed to make strategic decisions but lacked the cost accounting system and high-value data and analytics required to answer specific questions and generate improvement. The organization leveraged Health Catalyst PowerCosting™ to deliver accurate and actionable activity-based costing data. For the first time, the Woman’s team understands the true cost of services the healthcare system provides. The organization can constructively manage the true cost of care, improving revenue performance and the organization's financial viability. Woman’s has also enhanced strategic decision-making effectiveness.
Healthcare supply and wage costs have grown by 9.6 percent, while revenue has only increased 5.5 percent, resulting in a gap of 4 percent.1 Post-pandemic, the median hospital margin is negative 0.3 percent.2 Accurate activity-based cost accounting systems are critical for improving operations and operating margins.
Woman’s was facing increasing costs and the need to make strategic decisions, but it lacked a costing system and data required to answer specific questions and generate improvement. The organization recognized that relative value units and cost-to-charge ratios were insufficient, limiting its ability to identify opportunities for improvement and impeding the strategic planning process. Woman’s needed a new solution that would provide an accurate, comprehensive view of its costs at an activity level.
Woman’s implemented PowerCosting to deliver accurate and actionable costing data. The reports in PowerCosting serve up the timely, actionable information critical to improving outcomes today and sustaining the organization over the long term.
For the first time, Woman’s understands the true cost of services the healthcare system provides. The organization uses the aggregated data from multiple source systems to assess and understand costs, perform monthly cost closings, identify improvement opportunities, and support strategic planning efforts.
Aware that the number of patients accessing services at the Louisiana State University School of Medicine OB/GYN Residency Program had grown substantially, and with the goal of continuing to support the residency program, Woman’s used PowerCosting to assess the costs associated with the delivery of services, comparing cost data to the revenue received for the care provided. Woman’s identified the funding received from the Department of Health no longer aligned with the volume of patients receiving care or the costs incurred for delivering services. Woman’s used its detailed PowerCosting data to engage with the Department of Health to obtain additional funding for the residency program.
Woman’s makes use of PowerCosting for strategic planning. The organization can analyze detailed cost data and look at the contribution margin for every service. Executive leaders use PowerCosting to answer complicated questions about service delivery. For example:
Woman’s uses PowerCosting to inform capital equipment decisions. The organization uses its costing data, including patient volume, payer mix, and provider utilization, to determine how long it will take to produce a return on investment from capital equipment purchases.
Nursing leadership uses PowerCosting and partnerships with financial analysts to improve the effectiveness of labor management. Leaders use the detailed costing data to answer cost questions quickly and can drill down to the invoice level. Leaders can model, project, and evaluate the impact of potential changes on cost and financial performance. Nursing leadership used the costing data to evaluate its spend on contract nursing labor and assess its ability to decrease contract labor and invest the dollars it was spending into market-based adjustments for its employed nursing staff.
PowerCosting has helped Woman’s to constructively manage the true cost of care, improving revenue performance and the organization's financial viability. It has also enhanced strategic decision-making effectiveness. Woman’s results include:
Woman’s also improved the effectiveness of costing activities. The organization:
"The granularity of data in PowerCosting is significant and profound. It enables us to have conversations and make decisions in a way we’ve never been able to do before."
Cheri Barker Johnson, MSN, RNC-OB, Sr. Vice President of Patient Care, Services and Chief Nursing Officer, Woman's Hospital
Woman’s will continue utilizing its costing data to improve financial performance, decrease clinical variation, and improve the services provided to its patients.
