Cutting Costs at Your Medical Practice: 3 Areas to Review

July 8, 2014

If you are willing to trade short-term frustration for long-term financial gain, here are three key areas of potential savings for your medical practice.

With providers feeling anxious over the many reimbursement experiments occurring (accountable care organizations, those tied to the Affordable Care Act, Independence at Home program, bundled payments, etc.), it’s easy to forget there are other areas where providers, and administrators, can find significant savings and maximize the reimbursements coming in.

Time and time again, we have discovered that several practices are overlooking areas of key savings, and we’d like to discuss the more universal ones:

• Death By 1,000 Paper Cuts: As more practices adopt EHR solutions, this will become less of an issue. Over half our clients still utilize copier/fax solutions on a 36-month to 60-month lease option. Usually, these lease options come with a preset amount of "images" included in the price, with an uptick in per-image cost once that ceiling has been met. This can add significant increases depending on the volume of paperwork coming over the attached fax line. An "image" is defined as anything that’s printed out of the copier, including confirmation pages. You would be surprised how many machines are pre-programmed to print confirmations for faxes that went through, and that were denied. During the negotiation process (and it has to be done here, before the machine is delivered), insist that the machine only print denied fax reports, so your staff can note and resend. Or, better yet, if the machine has the capability to print to folder (and they all should at this point), insist that all confirmations are sent there. Reduce those images!

• Exit Strategy: During negotiations for almost anything involving a multi-year contract, you should have some kind of language giving your practice an out at minimal cost. Most notably, this can be used for both office leases and EHR agreements. Will this add some drama and frustration to the contract negotiation? Definitely. Will you be happy you sacrificed a week to make sure it was in the contract if you need to pull the trigger? Certainly. For office leases, I would say negotiate a 15-month out on a standard 36-month lease; 12-month out if you’re feeling bold. I’ve seen success with both options. For EHRs, vendors are usually amendable to an out; the real negotiation is the back-end payout. The point is, always have an eye out for minimizing back-end loss if, for some reason, the practice fails.

• Phones: Over the last four years, there have been some tremendous products introduced in this area that create real value for little investment. It seems most management teams are still focused on the POTS (Plain Old Telephone System) vs.. VOIP (Voice Over Internet Protocol) debate. In our minds, that debate is over, even if some practices are still opting for traditional landlines. The service, speed, and capabilities of VOIP make it a viable solution, and the only question is what VOIP solution is best for your practice. To be certain, you’ll probably spend a little more money implementing the systems, but the savings will be realized in the first year. Some reliable VOIP systems can be purchased for as low as $20 per line and $60 per phone. By switching from POTS to VOIP, a single practice can literally save thousands in operating costs.

And these are just three examples. When looking at cost reduction, the finer details are a good place to start. Two of these examples require an appetite for a little frustration and tenacity during the negotiation process, but you’ll be rewarded for the effort.