Home5 Ways Technology Can Reduce Healthcare Costs

5 Ways Technology Can Reduce Healthcare Costs

Despite the current favorable economic climate, healthcare margins are likely to continue shrinking over the next five years due to rising labor costs, demographic shifts related to aging baby boomers, changing insurance payout structures and an uncertain regulatory climate.

Each year, nearly one-fifth of the entire U.S. GDP is spent on healthcare. Medicare and Medicaid patients, who produced a negative 9% return in 2017, are projected to rise within the next five years to make up almost 45% of the patient population.  

Healthcare executives are searching for ways of cutting healthcare costs across the board, without sacrificing quality of care.

A competitive healthcare market has created a veritable technological arms race to the tune of nearly 20 billion dollars. Rapidly emerging technological solutions designed to improve hospital operational efficiency are already having a positive effect on hospital bottom lines.

In a fast-changing market, technology can provide the key edge for early adopters by automating some of the biggest medical cost-drivers.

So, how can technology reduce healthcare costs? Here are five cost-saving applications:


1. Automate administrative tasks for more efficient use of physicians’ time

Digitizing repetitive tasks can significantly cut down on the number of hours physicians need to treat patients.

5 Ways Technology Can Reduce Healthcare Costs | Healthcare Weekly

Administrative expenditures account for more than a quarter of total hospital spending in the U.S., higher than any other first-world country.

Doctors spend less than a third (27%) of their time treating patients; the majority of their time is spent on various administrative tasks. In fact, some doctors spend up to one-third of their time just entering patient notes into electronic health records (EHRs).

Obviously, this is not an effective use of a physician’s time. It also contributes to the already massive issue of physician burnout.

Artificial intelligence (AI) and basic digital software can limit—even automate—physician interactions with EHRs. For example, instead of manually entering test results or filling out intake forms, software can import test results and complete the corresponding paperwork. It can also provide prescription advice and reminders, and help physicians avoid excessive testing.

General administrative tasks such as appointment bookings and reminders can also be digitized and automated for greater clinical efficiency.

Bottom line:  Automating common administrative duties eases the burden borne by clinical administrative staff and physicians alike, reducing burnout and allowing the focus to shift from paperwork to patients.


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2. Lower staffing costs by using scheduling apps

Scheduling applications efficiently allocate human resources and allow organizations to meet their needs without resorting to expensive alternatives such as overtime and temp hires.  

5 Ways Technology Can Reduce Healthcare Costs | Healthcare Weekly

Labor accounts for more than half of most hospital operating costs, and up to 90% of variable costs. Too few nurses are entering the workforce, and turnover is at an all-time high, creating staffing issues that put an increased strain on hospital systems.

Proper staffing has a direct impact on both costs and patient outcomes. To combat unexpected patient volume or gaps in shift coverage, many hospitals currently turn to voluntary overtime or the extension of managerial staff to fill in the gaps. These options are significantly more expensive than paying for standard hours.

To better manage such factors, administrators need technology that integrates data on past shifts, current patient needs, and the expertise of existing staff into an actionable format. Luckily, DIY labor analyses can be conducted with basic data analysis software, including Excel. 

More advanced scheduling apps can do even more, however, allowing charge nurses and other managerial staff to circulate schedules on staff mobile devices and update them in real time. They can also visually monitor the number of open beds, emergency room capacity, and equipment status — all from the same platform.

With the addition of more complex software and AI, these apps can start using this information to predict future labor demands while simultaneously helping management address current needs.

Such tools provide key decision-making support for management staff by creating hospital-wide schedules that adapt to up-to-the-minute conditions and use predictive analytics to show demand for future shifts. According to some estimates, this could reduce personnel costs by up to 40%.

Bottom Line: AI-powered scheduling, paired with digital apps, can help administrators make efficient staffing decisions, reduce the cost of staff turnover and overtime labor, and ultimately improve patient outcomes.


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3. Reach more new patients with targeted digital marketing

Digital marketing allows health systems to directly target patients suffering from specific conditions, generating greater ROI than traditional marketing methods.

5 Ways Technology Can Reduce Healthcare Costs | Healthcare Weekly

Today’s patients face skyrocketing healthcare costs and have access to abundant online information when choosing a care provider. They are much more willing to shop around, compared with a few decades ago, and are more likely to switch providers. In fact,  almost half of millennials are likely to switch providers within the next five years.

It’s essential to meet potential patients where they are: online. Digital marketing enables micro-targeted ads that reach people searching for particular conditions or within a particular medical specialty.

And since many people spend more time online than they do sleeping, it makes sense that online marketing to potential patients would have a greater impact across the board. Most importantly, effectively targeted digital marketing can cost significantly less per new patient than traditional marketing.

Bottom line: If you aren’t already using targeted, digital marketing as part of your overall marketing strategy, you aren’t investing your marketing budget as effectively as possible.


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4. Improve claims processing and collections

Insurance claims processes are time-consuming and labor-intensive for both clinicians and insurance companies.

5 Ways Technology Can Reduce Healthcare Costs | Healthcare Weekly

However, digitizing information-intensive processes could cut costs by up to 90 percent and significantly improve turnaround times.

Moving away from traditional silos and towards information sharing can improve operational efficiency by reducing redundant outreach and risk assessment efforts. This kind of collaboration is especially critical for organizations lacking the capacity to scale to accommodate industry shifts.

Companies adopting automated insurance claims processing and dispute management will soon see key advantages, such as reduced labor costs, improved payment efficiency and increased customer satisfaction in a highly competitive field. According to one Gartner study, insurers leading in digitization will financially outperform slower digital adopters by 100%.

Bottom line: Automate and digitize insurance claims and collections processes to increase efficiency, reduce labor costs, and realize significant savings in both staffing and repayment turnaround times.


 5. Optimize the supply chain for value-based care

Supply chain analysis and automation reduces waste and frees up clinician time.

5 Ways Technology Can Reduce Healthcare Costs | Healthcare Weekly

Healthcare has been slow to adopt supply-chain management technology due to regulatory, cultural, and bureaucratic obstacles. However, new analytics and software tools enable increasingly fine-tuned inventory tracking, eliminate waste, and increase the efficient allocation of resources.

For high-priced inventory such as hospital equipment, wireless radio frequency identification (RFID) tags act like scannable barcodes, allowing providers to track items throughout their life cycle and remotely gain specific location, expiration date, manufacturer, and shipping data.

Even disposable supplies can be managed with digital information. Currently, this kind of inventory is often stockpiled or squirreled away by clinicians wanting to make sure it is available when required. This is a waste of time, space, and resources.

Implementing data analytics and automation tools in these instances makes management of the entire medical supply chain much more attainable and useful. Such implementation allows clinicians to focus on care, rather than the management of their supplies.  

Bottom line: Healthcare providers should evaluate their supply chain and prepare to implement tools that will enable the efficient management of supplies, all the way down to the smallest hypodermic needle.  


As the healthcare industry continues to shift, organizations must keep pace with regulatory, demographic, and technological changes while maintaining financial stability and high standards of care.

Hospital executives can use technology to keep pace with these shifts by:

  • – Optimizing the medical supply chain for greater efficiency
  • – Automating insurance claims processing
  • – Using targeted digital marketing to reduce customer acquisition costs
  • – Efficiently allocating human resources using staffing applications
  • – Automating administrative tasks, freeing physicians to spend more time with patients

The changes enabled by these technological solutions all serve to cut costs by enhancing operational efficiency, reducing costs, and improving patient and staff retention. The result? A positive return on hospital margins and patient care.