Look at the easy stuff to reduce the cost of overhead at your practice and go from there. There's a lot of money to be saved.
As every medical practice knows, it can be hard to stay on top of ongoing expenses. Most of the time, physicians are too busy taking care of patients to be able to spend time reviewing medical supply pricing and other practice costs. Typically, the first time a practice signs an agreement for products or services with a vendor is usually the last time those prices are assessed. But implementing a regular review of your expenses - at least annually - is critically to ensuring that you aren’t spending thousands more than you need to on practice operations.
Start with the easy stuff first
First, determine is you are you part of a buying group (group purchasing organization or GPO). If you are not, you are likely paying much more than you need to on items such as medical and office supplies, medications, vaccines, and other services. There are many GPOs to choose from so start with your medical association or local chapter to determine which one(s) they recommend for your specialty. Some of the larger, national organizations are Physicians Alliance, Practice Well, and CNECT.
Next, move on to salary and benefits.
Have you considered using a professional employment organization (PEO)? These organizations become the employer of record; so while you maintain the management of your employees, the PEO bundles up payroll, HR services and compliance, workers compensation, employer liability insurance, health care benefits, and so on under its entity. You pay either a flat rate per employee per month (Justworks) or a percentage of payroll (ADP) and the PEO does the rest. While it might seem more expensive than what you pay for payroll cost alone, one of the biggest benefits (and cost savings) is access to health care benefits that are priced for a much large entity than your practice could obtain alone. Additionally, there are often many ‘perks’ included such as gym memberships and life insurance, optional short term and long disability plans that employees can purchase and so on.
You should also determine if you are routinely paying overtime, and shop around for new payroll companies to make sure that you are not overpaying for those services. Finding more efficient payroll systems can reduce time and create efficiencies too, so look for price plus efficiency when evaluating options.
Then, take a look at services.
How much are you paying for your bank charges? For credit card processing? For phone and internet? Shop around for the best deals.
Simply asking your bank for a better deal can produce nice savings. A recent client – single location, four-physician group - saved $4500 a year in fees by switching to a new bank, but also gained process efficiencies with free remote deposit (no staff time wasted going to the bank every day) and online access to all their accounts through a single sign on.
Shop around for better credit card rates too. The least expensive and most customer friendly credit card processor that we’ve found is Payment Pros (and we’ve reviewed scored of companies to determine that, through one of my companies, Independent Practice MSO). You can also approach your current vendor and ask them to reduce their fees - there is not much they can do on the credit card company rates (Amex, Visa, MC) but they can reduce monthly fees and per transaction costs.
Call your phone company and ask them what special offers they have. If they are not willing to extend those deals to existing customers, tell them that you will be happy to switch to a new company for a better deal. Every time we’ve used that approach, we’ve received a better offer from the carrier.
Review your multi-year contracts, such as those you have with EHR companies. While there may not be much that you can do to reduce the rates you pay during that term, know when your contracts are up for renewal and ask for better pricing for any renewals. Much like the phone carriers, they would prefer to work in a discount to keep you than lose you to a competitor. Even if you think you’d never switch EHR vendors, they don’t know that, right?
Don’t stop there!
Once you get the hang of reviewing pricing, terms and negotiations, look at every expense item on your profit and loss sheet and apply the same methods to each of them. If you set up a system whereby you know what contracts and pricing you have with each vendor, and routinely review those rates annually and / or upon renewal, you will save yourself thousands of dollars in expenses every year.