Cutting Cost Might Mean Cutting Staff

September 8, 2010

Effectively controlling costs in a medical practice essentially means controlling personnel costs.

Rising costs and stable or declining revenue: It doesn’t require a business degree to realize that this is not a formula for long term success, but it is a reality faced by many medical practices. This reality has been a motivator for many physicians who are seeking an employment relationship with a hospital, but is it the only solution?

It is certainly true that few physicians have the power to dramatically change their revenue, unless they choose to work harder or reduce their operating expenses. Unfortunately cutting costs is not typically what practices are good at.

Effectively controlling costs in a medical practice essentially means controlling personnel costs. Reducing the cost of salaries frequently means reducing the number of staff on your payroll, but it might also mean increasing the volume of work performed by existing staff members. Regardless of your approach it will mean changing the way you conduct your business. Here are some ideas that might work in your practice:

Get the right people. Look at your best staff. If everyone was like them could the work get done with fewer people? The answer is usually yes and that means that you must focus on keeping the right people and replacing the weaker performers. Sometimes paying a premium to attract top performers actually saves money.

Leverage people with technology. You can no longer afford to manually make reminder calls, move paper medical records, fax prescriptions, and mail the results of normal labs. Look at some of the excellent data solutions for these tasks and accept that the time has come to automate certain practice processes.

Provide incentives. Consider encouraging staff to think of ways to make the practice more productive. If they can be creative and add one patient a day this can mean more than $13,000 in added revenue. Sharing some of that might be a good investment. If someone leaves encourage your staff to re-examine work flow to see if that position is really needed. Offer a small bonus if they are successful.

How many are enough? Do you really know how many staff you need or do you staff out of habit? How many minutes does it take to check in a patient and how many patients an hour arrive at your practice? Maybe two people are all you really need. Maybe hiring a part-timer for mornings when the desk is busiest is the answer. How many phone calls do you receive for appointments and how many calls are there per day? You can measure how long a call is (many phone systems can tell you this) and use this number to calculate the number of people necessary to answer phone calls. This system works for charge entry, payment entry, and other office tasks as well.

Cap your cost. Loyalty is great. Many practices have staff that have been with them for years and, in some cases, decades. However, the harsh reality is that, over time, some of these folks will see their incomes rise to the point of being too expensive for their position. A front-desk professional is only worth what an experienced one would cost if you hired them this week. Same for a top biller with years of service. At some point you have to cap wages. As an alternative to annual increases you might consider a small recognition bonus each year.

Part-timers may save you money. Typically part-time employees have fewer benefits than full-timers which lowers their cost. With the downturn in the economy many individuals who left the workforce are coming back and seeking part-time opportunities. Maybe they are looking to work while school is in session? If some tasks can be done in five to six hours per day, or a few days a week, consider if these less-than-full-time professionals can save you money.

Most practices are quick to find deals when they purchase supplies or equipment and may bargain effectively when the lease comes up for renewal. Now might be the time to be equally cost conscious when it comes to your biggest expense, staff.

Greg Mertz is associate director of Navigant Consulting, Inc. He can be reached at greg.mertz@navigantconsulting.com.