Businessweek offers a slideshow on steps, some quite simple, that hospitals can take to slash costs. For example, just rigorously enforcing hand washing has lead to significant savings. Being more cautious in the use of diagnostic imaging (e.g. MRIs) could save the average hospital as much as $7.2 million. Better coordination of care and coaching for people with chronic diseases and for recently discharged Medicare patients could lead to much better outcomes.
The related article by Catherine Arnst is here.