Healthcare industry: Cost reduction guide 

In today’s rapidly evolving healthcare landscape, providers face mounting financial pressures from rising operational costs, shifting reimbursement models, and increased demand for high-quality, accessible care. The ongoing economic and policy uncertainties, coupled with the need to invest in digital transformation and workforce resilience, make cost management and finding ways to do more with less a critical focus for healthcare providers today. By strategically reducing expenses, healthcare organizations can improve financial sustainability, reinvest in innovative care delivery, and ensure long-term viability while maintaining or enhancing patient outcomes in a highly competitive and resource-constrained environment.

Mercer emphasizes that achieving sustainable cost reductions for healthcare organizations requires:

• Data-driven strategies: Utilize real-time data and predictive analytics to identify opportunities and monitor progress effectively.
• Understanding overall human capital spend: Analyze workforce costs to pinpoint areas for reduction and targeted reinvestment.
• Focus on efficiencies and optimization: Insights into current and future talent supply and demand, redesign of work and roles to enable staff to practice at the top of their licenses, improving productivity.
• Proactively address people risks: Have a cohesive view across HR and risk that prioritizes safety, security, and well-being to maintain a resilient and engaged workforce.
• A new approach to change management: Apply analytics to guide and sustain on-going change initiatives across all areas of cost reduction and operational improvement.
• Not losing sight of long-term strategic focus: Balance immediate cost savings with long-term organizational goals, ensuring sustainable growth and quality care.

Based on these requirements, Mercer suggests that healthcare provider organizations consider undertaking several transformational efforts, including:

• Workforce Optimization: A data-driven approach to improving efficiency and effectiveness of staffing models and care teams without sacrificing patient outcomes.
• Work Redesign: Redesigning work at the task level to significantly improve capacity by rethinking roles & work.
• Strategic Risk & Reward Insights: Data-driven insights and a fresh perspective providing a new baseline for total rewards and worker’s compensation.
• Integrated Worker Well-being, Safety & Security: A paradigm shift for how we support worker well-being.
• People at the Center of M&A – Strategy Through Integration: Healthcare transactions are dependent upon caregivers remaining engaged and productive well beyond close.
• Managing Investment Assets to Potentially Reduce Costs: Strengthen investment portfolios by adopting disciplined asset management strategies with the goal of freeing up capital for operational improvements and strategic initiatives.
• Data-driven Change Management: A new approach to delivering change in healthcare today that’s required across all transformation efforts.

In today’s complex and competitive healthcare environment, achieving meaningful and sustainable cost reductions is essential for long-term viability. Mercer stands ready to partner with healthcare provider organizations to navigate this transformation, leveraging a comprehensive suite of strategies that encompass data-driven decision-making, workforce optimization, work redesign, and proactive cost and risk management. Our expertise helps organizations reduce costs, unlock efficiencies, optimize investments, and foster a resilient, engaged workforce while maintaining the highest standards of patient care.

By embracing these transformational efforts, healthcare providers can not only meet their immediate cost-saving goals but also build a foundation for sustainable growth and innovation. Mercer’s proven approach and tailored solutions empower organizations to implement lasting change across all facets of their operations. Now is the time to act—partner with Mercer to lead your organization through this critical journey of cost management and operational excellence, ensuring a healthier future for your organization and the communities you serve.

For more information and to contact a Mercer consultant, visit our Healthcare Industry page.