Nickel and Dime Leakage That’s Costing You Big

November 1, 2009

An unnecessary service charge here, a bloated maintenance contract there - you may be only dimly aware of how these small “nickel and dime” charges add up to big bucks.


Colonial Family Practice was doling out about $400 a year to their practice management system vendor for antivirus protection. Problem was the Sumter, S.C.-based practice wasn’t even using the service, instead using an antivirus system purchased through a local IT company for all their computers.

Then there was the $500 annual maintenance contract for insurance card scanners - which the practice hasn’t used since 2005.

No one at the practice was using the code correct function in the system, but that didn’t stop them from being charged $1,200 a year for it.

“Some of [the charges] are small, but they add up,” said Krishna Bhat, a contractor working with Colonial Family Practice to find savings in their billing, operations, and purchasing processes. He has helped the practice comb through the bills from the practice management system vendor, and has turned up about $37,000 in unnecessary annual fees for redundant and unused services - fees they hadn’t even noticed they were paying.

“I think when it comes to things like practice management systems - it’s mindboggling the small items that are there. It’s physically impossible for an average person to catch it.”

A trickle here and there and these small charges can really add up to major leakage for your practice. Of course, you’ve been warned about the big-ticket areas from which cash can really flood out of your practice: There’s the need to code properly, rather than always opting for the safer, lower-paying 99213 for fear of being audited. And don’t forget to collect copays from patients before they leave your office, which greatly increases the chances you will ever see that cash. You know you should try negotiating with payers and automating some of the manual claims processes.

But money still could be slowly seeping out of your practice through some overlooked cracks. Taking a fine-toothed comb to some of your bills is one less-obvious place to start.

Vendor charges may be bundled, or even if they are itemized, often the balance changes month to month based on volume, says practice management expert Elizabeth Woodcock. The services offered by practice management systems and EHR vendors are often so complex that most times, practices might not notice they are being overcharged. The same goes for telecommunications services. When was the last time you really scrutinized the phone bill?

But look closely. A few cents here and there for unused services and capabilities can create mounting losses without the practice even realizing it, Woodcock says. “Unfortunately, the complexity can sometimes hide the problem.”

Here are a few more nickel and dime leaks that may be costing your practice big bucks:

  • Janitorial contracts. Make sure you’re paying a competitive rate for the office cleaning, says consultant Lucien Roberts. One practice, he says, was paying $3.13 per square foot for janitorial services, while the neighbor was paying $1.45. For a small office, that’s more than a $2,000 difference. And if it’s a satellite office that’s not used everyday, does it really need to be cleaned five days a week? Why not cut that down to two?

  • Maintenance agreements. Are you paying big bucks to keep fixing an old copy or fax machine? Maybe it’s time to consider whether the maintenance costs are worth it, says consultant Judy Capko. Consider coughing up a few extra bucks on a more efficient machine, such as a two-sided copier or even a small card scanner for insurance cards, which will save time and money in the long run, she says.

  • Staff overtime. Woodcock estimates about a third of overtime is abused: take for example the employee who comes in 15 minutes early each day to pad her paycheck. Not much, you think? For a $20/hour employee those extra few minutes can add up to nearly $2,000 a year. Instead, staff should have overtime approved by a supervisor. “You really want to have a policy in place,” Woodcock says. If the job isn’t getting done in the 40-hour week, it might be an efficiency problem, and time to take a closer look at the practice’s work flow, Capko adds.

  • Credit card processing. Take a close look at your rates and do a little shopping around, rather than just relying on the vendor you’ve had for years, Roberts advises. One practice opted for an online processing system, which saved the cost of buying or leasing the equipment, plus the cost of the dedicated phone line, he says. This could save $30 a month.

Thirty bucks here and there might not sound like much. But as Colonial Family Practice found out, the smaller, overlooked charges can really add up. Plugging the sources of some of the less visible leaks can go a long way to keeping your hard-earned cash from washing down the drain.

Sara Michael is an associate editor for Physicians Practice. She can be reached at sara.michael@cmpmedica.com.

This article originally appeared in the November 2009 issue of Physicians Practice.