Reducing Red Tape to Help Hospitals Improve Care and Reduce Costs

Kathleen Sebelius, MPA


October 18, 2011

While regulations are often meant to protect people from harm, there are some that are obsolete, burdensome, or simply outdated. With this in mind, the Obama Administration is taking a big step forward to eliminate redundant and overly burdensome regulations.

In particular, the Department of Health and Human Services (HHS) is working on reducing unnecessary, obsolete, or burdensome regulations on American hospitals and healthcare providers. Today, we are proposing 2 sets of reforms, and finalizing another, that will save hospitals and doctors nearly $1.1 billion in the first year and $5 billion over 5 years. These common-sense changes would free up more resources to improve care, see more patients, and hire more staff.

One of the first areas we looked at was the regulations that were getting in the way of the best care. So today we're proposing rules that will reduce these burdens and give hospitals and providers the flexibility to improve care.

For example, today hospitals must have a single Director of Outpatient Services who manages all of the various outpatient services throughout the hospital. This requirement was created years ago when most of the care given in a hospital was inpatient. Back then, it made sense to have 1 person in charge. But these days, everything from arthroscopic knee surgery to tonsil removal can be done on an outpatient basis. And each of these departments oversees its own services. This has made having 1 director oversee all of these specialty directors an unnecessary administrative burden on hospitals. So as part of the proposed rules, we would do away with this requirement and allow hospitals to decide the best way to oversee and manage these patients.

The rule would also allow Critical Access Hospitals in our nation's rural areas to focus on their patients by removing the requirement that all lab work, radiology services, and other items be done in house. This requirement meant that these hospitals, which operate on razor-thin budgets, had to employ all their own laboratory and radiology technicians as well as countless other staff. Under the rule, they'll be able to contract with companies that do this work and provide the same great care at a lower cost.

A third change the rule makes is freeing up hospitals to use their advanced practice registered nurses and other nonphysician providers to their fullest potential. Many states allow providers like physician assistants and advanced practice registered nurses to provide a wide range of services, but the federal guidelines are often more restrictive.

Now, hospitals would have the option to credential and privilege these health professionals to the fullest extent of state law. That means giving patients greater access to care and allowing hospitals to make the best use of their staff and even hire more.

And the rules would also remove many outdated billing practices, which will save hospitals and physicians time and money.

These rules reflect the Administration's ongoing commitment to reducing regulatory burdens as much as possible while maintaining full protections for the doctors and patients in our system. Altogether, thanks to this and other regulatory reform efforts across the government, departments and agencies throughout the entire Administration will save at least $10 billion over the next 5 years with the potential to save much more.

Going forward, President Obama has made it clear to me and all agency leaders that we need to continue to reduce regulatory costs and burdens and prioritize regulations that promote economic growth and jobs. We are proud of our contribution today and recommit ourselves to do more.


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