You have to spend money to make money, but in order to maximize your profitability, you need to keep medical office operating expenses under control before they eat your practice alive (not unlike an antibiotic-resistant MRSA).
Let's explore some medical practice expense control tactics that can save your practice real money.
1. Know What You're Spending
If you’re not currently managing finances, pull out those income statements and look at where the money's going. You may be surprised. Seeing your expenses laid out on a spreadsheet can give you a eureka moment about where the money's really going.
2. Identify Staffing Challenges
Payroll is a huge chunk of your overhead. Making changes there will have a swift and meaningful impact. Are you paying excessive overtime while not getting the value you should for that money?
A CDC study found that nearly 19% of adults work over 48 hours a week and 7% over 60. Working long hours increases error rate and significantly reduces productivity.
A Stanford University study found that employees who work 70 hours do the work equivalent to those working 55 hours. If this study holds true for your practice, the extra 15 hours you paid at time and a half amounted to nothing. Re-evaluating your staffing efficiency isn't easy, but it's one of the best ways to institute medical practice expense control.
3. Evaluate Your Fixed Costs
Look at what's going out each month because of standing agreements and contracts. This may be:
Assess these expenses and look for opportunities to renegotiate rates or find a new vendor. Many of these expenses continue at status quo because it takes time to investigate your options and get costs down, but they can make a huge difference in your medical office operating expenses and your bottom line.
4. Evaluate Your Inventory Practices
Are you running a lean supply chain management system or is the supply room experiencing significant waste in the form of:
Paying for extra storage for things you don't need
Buying too much and then allowing things to expire
Shrinkage loss due to employees raiding the closet
Can't find what you need when you need it so you order more
Do a regular inventory to look for inconsistencies and inefficiencies.
Keep Evaluating Your Medical Office Operating Expenses
Follow these tips to reduce waste and maximize profitability. Ideally, review your expenses consistently throughout the year to keep spending under control.
When you keep your costs low, you keep patient costs lower and are part of the solution when it comes to better, affordable healthcare.