Medicare’s national pricing has providers tightening their belts (Should you be getting lean?)

Further reimbursement cuts are expected when Medicare implements its national competitive bidding pricing on January 1st of next year. Liz Beaulieu of HME News reports, “For an idea of what providers are grappling with … the new pricing for oxygen concentrators would be $86.36 per month, a 47% reduction, if the town is considered a standard MSA, and $77.94, a 43% reduction, if it’s considered a rural area.”

Shrinking margins aren’t new to healthcare providers and specialty pharmacies, and while some have taken steps to reduce costs, like limiting the number of brands they carry per product category and favoring less costly options, many are considering more holistic approaches like becoming a lean organization.

You’ve most likely heard of “lean manufacturing”, but you may not be aware of how these principles can be applied to any organization, including service-based companies, to drive efficiency and cost reduction without negative impact to your patients.

Briefly, the core idea of lean is to maximize customer value while minimizing waste through continuous improvement across value streams. There are three areas of focus that enable this: Purpose, Process, and People.

Purpose: What customer problems will the organization solve?

Process: How will the organization assess each major value stream to make sure each step is valuable, capable, available, adequate, flexible, and that all the steps are linked by flow, pull, and leveling?

People: How can the organization insure that every important process has someone responsible for continually evaluating that value stream in terms of business purpose and lean process? How can everyone touching the value stream be actively engaged in operating it correctly and continually improving it?

Lean is a big topic and we certainly can’t tell you everything you need to know to successfully implement it. However, in our next two posts we will cover lean principles and getting started with lean in enough detail to help you evaluate whether this approach may be the right one for your organization.

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