Succeeding under managed care using strategic cost reduction.

Under managed care, healthcare providers experience drops in utilization and the prices they can charge for services. Therefore, healthcare providers that achieve lower costs increase their chances for success. Operational improvements to control costs include reducing unit costs, reducing capacity, accelerating operational decision making, and developing new performance measures. Strategies to control costs include managing costs along the continuum of care, continuously managing costs, and refining assets. Specific cost-reduction strategies include building primary-care-driven networks, undertaking patient-focused care initiatives, reengineering patient flow, implementing managed variable costing, and developing a tight primary care operating environment.