As part of a 55,000 hour research and development project, spanning six years, The Center for Modeling Optimal Outcomes^® LLC, has developed an organizational operating model to eliminate inefficient processes and wasteful spending in healthcare provider operations.

The Center's portfolio, which consists of a variety of products and services, is available for industry-wide adoption and implementation.

Founded by one of the nation's leading healthcare expense management experts, William J. McFaul, and fortified by a diverse team of clinical and operational staff and advisers, The Center created and developed a series of cost-reduction and management service lines designed to generate meaningful and realistic reductions in operating expenses, as well as a series of clinically focused specialties geared toward improving patient outcomes.

Based on a random sampling of published data from 50 hospitals and health systems conducted by The Center, McFaul's team identified a number of factors that indicated the percentage of total hospital spending attributed to non-payroll expenditures is far greater than previously thought. The Center can work with other hospitals and health systems perform their own similar studies.

McFaul noted,  "Our recent analysis indicates that the industry percentage of non-payroll expense is as high as 57 percent. Adjusting for a few non-controllable factors such as regulatory and licensure fees, interest, depreciation and capital related costs, we feel it is safe to use a range of 50 percent to 55 percent as being controllable expense."

In fact, McFaul believes that by expanding the expense reduction model his original firm developed in the early 1980s and adjusting for today's issues hospitals and health systems conceivably can generate at least $300 billion in real expense reductions over the next ten years. He attributed these expectations to the adoption and implementation of a new generation of methodologies that takes "lean" management to the next level.

"Making these services for cost reduction and management available to the industry will enable providers to slash operating expenses by $35,000 to $50,000 per bed in service per annum," said Center member Al (Alfred) LoBiondo, a 25-year veteran in healthcare expense reduction, strategy development and execution planning with extensive experience in group purchasing and shared services operations. "These dollars fall predominantly in the non-payroll expense stream without negatively impacting quality of care."

The Center's "Strategic Initiatives in Healthcare^®" include the following services:

• Resource Maximization^SM, a comprehensive array of tools and training material that represents the next generation of the healthcare application of value analysis. McFaul was one of the early pioneers in using healthcare-specific value analysis in the mid-1970s by creating the model that is still in use today.
• Resource Maximization Coordinator^SM provides healthcare organizations with the explicit methodologies to create a culture of change acceptability and to provide access to resident staff from the service providers to manage the ongoing process. "One critical step to neutralize the impact of the organizational silos prevalent throughout nearly all aspects of provider operations," LoBiondo said, "will be the need to create a culture of change acceptability in all organizations."
• Consumption and Utilization Analysis^SM, a statistical, information technology-driven solution that brings current lean methodologies into a new dimension to reduce waste and abuse of products and services.

The SIH services, and associated intellectual property, which include pending patent processes, trade and service marks, and volumes of copy written materials which document these processes are available through licensing agreements between The Center and group purchasing organizations, consulting firms and healthcare providers.

For additional information on these or any of the other services developed for healthcare expense reduction or quality enhancement by The Center, contact us