The Frugal Physician

January 15, 2009

The economy is tough all right, and many medical practices are frantically treading water in hopes of weathering the storm.

The economy is tough all right, and many medical practices are frantically treading water in hopes of weathering the storm. But take heart, there are some steps you can take to stay solvent.

First, prepare an annual budget, based on the assumption that revenue will remain constant from year to year. If you anticipate revenue declining or rising significantly over the previous year, make appropriate adjustments to your current numbers. Then, analyze your spending habits. Tighten up without compromising practice operations or patient service.

The highest cost of operating a medical practice is usually associated with staffing:

  • Eliminate costly overtime. Overtime is expensive - think 50 percent higher wages for decreased productivity - and often a waste of money. Look at overtime trends by staff position. For example, are most of the extra costs in the billing department or for your nursing staff? This will help you identify the cause and determine what actions to take to reduce costs.

  • Reassess manual processes. You might be able to automate some of them through better use of existing technology. Investigate how well your practice is integrating and optimizing its practice management system and EMR.

  • Use automated appointment reminder systems, e-prescribing, and instant messaging to communicate within the office - three big winners that will reduce staff time, thereby saving time and money.

  • Tighten employee benefits. These are high on the list for medical practice overhead expenses. Take a look at how you might better control them. This may mean higher deductibles and passing on a bigger share of the cost to your employees. But be careful. Too much cost-shifting will demoralize your employees.

  • Use smart-sourcing. That’s outsourcing services that can be done better off-site. This offers an opportunity to obtain expert advice while reducing expenditures and streamlining processes in areas such as billing, collections, and payroll processing.

Once the budget is approved, review it each month and compare the monthly and year-to-date costs to actual budget numbers. When you are over budget, seek ways to manage costs so that you will be within budget parameters by year’s end. Judy Capko

is a healthcare consultant, speaker, and author of the popular books; Secrets of the Best Run Practice, 2006 and Take Back Time, 2008. Judy is the owner of Capko & Company, www.capko.com, based in Thousand Oaks, Calif. and can be reached at (805) 499-9203 or judy@capko.com.