Juliet Breeze, MD, is no coupon clipper who hangs sheets at
the windows for curtains and makes her staff recycle paper clips.
But through creativity and tough negotiation, she saved Richmond Bone and Joint Clinic more than $66,000 a year in overhead — one reason she's quick to smile her gracious Texas smile as she invites you into her plush orthopedic office building complete with physical therapy and imaging.
It would be great if every practice had a Dr. Breeze keeping
an eye on the bottom line, but most struggle along not really sure from month to month if things are good, bad, or ugly,
financially. That can make for some sad end-of-year surprises.
On the following pages, meet some practices that tracked three key financial indicators right — with tactics you can use as inspiration in your own practice, and some tools to help you crunch the numbers. Consider it networking made simple.
Get a grip on overhead
Since 2000, costs rose from 59.3 percent to 60.3 percent of revenue for multispecialty practices — and it hovers around 58 percent for family practices (MGMA Cost Survey, 2004 Report Based on 2003 Data). It's a hefty portion of your revenues. Keeping it under control takes a little creativity. Look to Juliet Breeze as your muse.
A family practitioner by training, Breeze has been acting as the practice administrator for the Richmond Bone and Joint Clinic of Richmond, Texas, for the past two years. From the start, she jumped right into cost cutting.
First, the practice began contracting with a utility broker to keep energy costs consistent.
"Instead of paying for the energy on a month-to-month basis," says Breeze, "we buy a chunk of electricity that we would expect to use for the year ahead. We're locked into a rate that is spread out over the course of the year.
"The benefit is that, number one, the monthly power bill remains very steady, and you don't have seasonal ups and downs. This makes the physicians really happy when their distributions aren't bouncing all over the place. And we're not subject to rises in the power costs."
How much has Breeze saved the practice in power bills?
"We were able to reduce our average power bill from $8,000 a month to $5,200 a month. And in our satellite office, we saved $150 a month. So we had a total cost savings of $36,000 a year," Breeze says. Not bad.
Next Breeze took on the cost of insurance — both professional liability and healthcare for the staff.
"As for malpractice insurance," she says, "it's ugly for everyone. In Texas we don't have a whole lot of choices. There are only two or three companies that provide malpractice [coverage] right now. So 'shopping' is not exactly the right word for what I did."
Instead, Breeze looked at the local marketplace. What kind of coverage did other physicians have? She discovered quite a few carried less coverage than her physicians did. So, she says, "We dropped our extent of coverage to meet the minimum requirements of the hospitals in our area." Breeze figures she's not only saving the practice money, but in effect, reducing its possible risk.
