Healthcare Expense Experts Identify $300B in Potential Savings

New model aims to slow healthcare's fiscal redlining

JACKSON, N.J., Oct. 22 /PRNewswire/ -- As Washington wrestles with reforming
the healthcare insurance system, The Center for Modeling Optimal Outcomes®
LLC, a Jackson, NJ-based think tank, developed an organizational operating
model that focuses on eliminating inefficient processes and wasteful spending.

The Center's portfolio, which consists of a variety of process models 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.

"When I worked with the Department of Health in New Jersey during the DRG
experiment in the late 1970s we found the percentage of non-payroll expenses
was in the range of 40 percent to 45 percent," McFaul noted. "Our recent
analysis indicates that today the number 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."

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 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(®)" are available through
limited 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
Mark Trottnow at MTrottnow@TheCenterNJ.com.

SOURCE The Center for Modeling Optimal Outcomes LLC

Mark Trottnow, The Center for Modeling Optimal Outcomes(R) LLC,
+1-215-205-7869, MTrottnow@TheCenterNJ.com