| Monday, January 01, 0001
Every business's goal is to make money. From the billions of dollars generated by high-echelon multinationals, to the lawn mowing/dog walking operation I fronted as a kid in the late 90's (I didn't mow and walk them at the same time, but don't think I didn't consider it), honest work and an eye for efficiency keeps businesses afloat. However, in a quest to become profitable, businesses and their respective owners shouldn't simply stop at looking for opportunities to bring in revenue. They should carefully consider the extra expenses they can eliminate.
The so called "little things" involved in operating a practice can add up substantially. Where many physicians might overlook these "nickel and dime" affairs, savvy practice owners with a knack for business know when and where to cut costs, where to focus their fiscal energies and how to keep their practices stable in the long run. The following list can help discerning physicians in any attempt to keep things profitable and in the black.
Web communication's certainly not going away, and only the craggiest of luddite dinosaurs buck its existence, so why not use it to your financial advantage? Besides its function as a global communication tool, capable of reaching thousands upon thousands of users by effortless keystrokes, physicans can utilize web services to literally beckon patients right into their office with an internet appointment scheduler. The convenient method makes for smooth scheduling on the part of the patient, since they're not required to phone in, or visit the office during business hours, and they can book appointments on their own time and from the comfort of their own homes. Additionally, when automated and synced to an internal schedule, an internet appointment scheduler reduces the risks of human error like over-scheduling or double booking. The subsequent effects are felt when physicians save money by cutting needless costs, like an extensive wait staff and time spent on the phone.
Review Operational Costs
Good physicians are always reviewing the bottom line of their practices and seeking to control the costs that accompany it. When it comes to supplies, be they office supplies or medical instrumentation, physicians may be tempted to "comparison shop," picking and choosing each item from the most cost effective vendors. While fiscally sound in the short run, it shouldn't be treated like produce picking at the local market. The added costs of purchasing items from multiple vendors (shipping costs for example) can compound quickly and result in higher expenses than necessary. One method is to purchase all, or as many as possible, items from the same vendor. Standardizing these items will help practices save on shipping and handling costs, and in many cases, vendors grant generous discounts for items purchased in bulk. A high volume of business puts the practice in a commanding position for negotiation and will sway willing vendors to match competitor prices in an attempt to keep frequent customers satisfied and returning.
Another pressing options to consider is that of real estate. Does it make more sense to purchase the building that houses a practice, or to simply rent one? Is it more cost effective to purchase a lab, testing or surgical equipment, or to lease it? These are all questions that business-conscious physicians can review when attempting to improve their bottom line.
Finally, physicians with small and specialized practices need to bring in a mix of patients however they can. By reviewing their payer mix, and establishing good relationships with regular patients, physicians shouldn't be afraid to actually ask for referrals. While such a strategy might seem outdated, A Doctor's Digest article Maximizing Income while Controlling Costs, tells the story of a doctor who asked all of his patients for referrals, and increased his patient load and accompanying revenues by 30%. The method takes a grass roots business approach, and requires some refinement but it pinpoints patients specifically, and will save on costly advertising campaigns that practices might otherwise resort to. Besides, numerous studies indicate that despite the advent of faceless social media and internet rating sites, word of mouth still goes a long way and patients are most likely to frequent a practice at the recommendation of their friends.
In high volume patient scenarios, physicians may opt for an automated answering service that routes callers to specific members of the practice and can take messages when necessary. While attractive to large practices with a heavy influx of calls and communication, small and mid-level practices may find it needless and can be just as effective with a simple answering machine. Equipped with an outgoing message encouraging patients to leave their information and providing a personal number in case of emergency (at the physician's discretion of course). Sure, it's basic but it serves the necessary purpose, and with one simple phone line, patient calls and messages are far less likely to get lost or tangled in "the system."
Additionally, practices can shave down expenses (in some cases, up to $400 a year) by ditching their national phone company, and going to one that's small and local. Besides mounting good rapport with local businesses in the area, it cuts extraneous expenses that come with national phone services packages.
Save Some Trees
In his article Business of Oncology: An Office Lab can Turn a Tidy Profit, Neil Chesanow identifies paper as "killing a physician's bottom line." The loaded statement possesses multiple meanings, but an immediate money saver for physicians is to regulate the timeframe of their co-payments. When practices mandate their co-payments be collected directly at the time of service, they inadvertently cut a mess of expenses. When practices aren't sending out billing notices, they save time and money on stamps, expensive letterhead and postage meter rentals. Practices can also control expenses by only accepting cash or personal checks for payment of service, and in necessary cases encouraging patients to directly pick up their prescriptions instead of having them mailed.
In scenarios where mail-out billing is required, outsourcing the billing process can be cost effective for physicians with full plates. It will incur an immediate expense, but expensive computer billing programs will have the same effect. When physicians and staff are inundated with paperwork and forced into handling billing the old-fashioned paper way, they're given less time to see patients and they're engaging in an outdated, (Chesanow identifies it as "error-prone") method, which will ultimately end up costing a practice much more.
Stay On Top of Claims and Contracts
When dealing with insurance companies, it's always good practice to ensure that income and reimbursements are coming in for the right amount. Physicians should cross-check all payments made and look for small typos in paperwork, as a misplaced zero or comma makes a world of difference when it comes to fiscal compensation. Also, claims denials can prove costly. Make sure to manage them carefully and watch for errors in numbers.
Payroll, Specialization and the "One Stop Shop"
In reference to her own small practice in Orchard Park, NY, Dr. Bonnie Sunday identifies payroll as her practice's "biggest expense." In payroll scenarios, physicians can identify "low traffic" days and, if feasible, can close the practice in an effort to control unnecessary costs (For example, Dr. Sunday closes the practice on Wednesdays). Employees logging expensive overtime can also become a problem when done in excess, so to combat the problem, staggering employee schedules can offset the struggle of one physician having too much of a workload at any given time.
Finally, Michael McBride encourages physicians not to combat problems or shortcomings in staff by simply throwing money at the problem, hiring new ones. A more fruitful approach may be to simply train staff members on various tasks even if it's outside the normal "sphere" of their job description, and if possible help them specialize in multiple areas. In his article How to Maximize Revenue with Minimal Effort, Terry L Mills MD, refers to this practice of specializing and minimizing staff as "streamlining message traffic." Fewer people with higher, well rounded capabilities result in more efficient visits for the patient, providing an all around "one stop shop" experience in which they can accomplish all their needs in one trip.
Establishing an in-house testing lab, though laden with expenses in the immediate realm, saves a practice money down the road and will attract private pay patients to an office. When physicians aren't referring their patient to off-site labs or paying to ship samples to Commercial Reference facilities, and they're steering testing and business right into their office, cutting excessive operational costs and opening themselves up for substantial monetary returns.
No two practices are exactly the same, and physicians must always review their operational costs, methodologies and demographics before making any final decisions about running their practices. Still, with an eye out for cost saving and efficiency, and a willingness to think outside the box and adapt, small cost-saving techniques will keep a practice in the game and more adequately at the patient's disposal.
McBride, Michael. "Oncologists Advised to Build Their Own In-Clinic Medical Laboratories." DARK Daily Laboratory and Pathology News. 30 Mar. 2011. Web. 14 May 2012. <http://www.darkdaily.com/oncologists-advised-to-build-their-own-in-clinic-medical- laboratories-33011>.
Mills, Terry L. "How to Maximize Revenue With Minimal Effort - May-Jun 2009 - Family Practice Management." How to Maximize Revenue With Minimal Effort - May-Jun 2009 - Family Practice Management. AAFP, 23 Mar. 2009. Web. 14 May 2012. <http://www.aafp.org/fpm/2009/0500/p18.html>.
"Maximizing Income While Controlling Costs." Doctor's Digest. May/June 2006: 62-87. Web. 14 May. 2012. <http://www.doctorsdigest.net/pdf/0203_03.pdf>.
"Streamline Practice to Boost Cash flow." Doctor's Digest. Mar/Apr 2005: 8-29. Web. 14 May. 2012. <http://www.doctorsdigest.net/pdf/0102_01.pdf>.
"Squeezing Out Savings in Overhead Costs." Doctor's Digest. Mar/Apr 2005: 104-121. Web. 14 May. 2012. <http://www.doctorsdigest.net/pdf/0102_05.pdf>.
Dylan Chadwick is a graduate of Brigham Young University where he earned a Bachelor of arts in English and a minor in Spanish. Though spending his formative years in Cardiff Wales, he came to adolescence in Elizabethtown Kentucky, and considers it his home. He received the Eagle Scout Award, served a voluntary humanitarian mission to inner-city Los Angeles from 2007 to 2009, and once met Alan Alda on a golf course. He's an avid writer who cut his teeth contributing to student papers and continues writing for various print magazines, blogs and web resources. A ravenous fan of baseball, rock music and Dan Aykroyd-era Saturday Night Live, he plans on one day utilizing these interests in a Masters degree in American Studies and Literature. He also maintains a freelance illustration company on the side.