Cost-Cutting Checklist for Your Medical Office
When was the last time you took a carefull look at your office overhead costs and compared them to the same period last year? Expenses can creep up fast if nobody is monitoring them. Generally speaking, the cost of running a medical office can range between 35 and a whopping 70 percent of the practice's gross revenue. No matter where you fall in that range, keeping costs down requires vigilance that can pay off in a higher profit margin.
Here is a checklist of some specific overhead expenses that you can print out and use to find possible saving opportunities:
Cost-Cutting Checklist for Your Medical Practice
Office space - Could you share space and resources with a physician with a complementary specialty? One who works later or earlier hours? If you rent, your accountant can perform a "commercial lease audit" to look for possible overcharges. A lease audit involves reviewing the language of your lease, confirming the square footage of your space and examining the operating expenses that your landlord passes on to you. If you own your office space, check into refinancing the mortgage to obtain a lower interest rate.
Repair and maintenance contracts - Even in the middle of a multi-year contract, you may be able to renegotiate, although it may mean extending the contract beyond the original expiration date. Before calling the vendor, find out if your practice is using all the services it is paying for, and whether or not the vendor is providing quality service. Alternatively, you may find that pay-as-you-go service is less expensive in the long run.
Other service contracts - If your practice uses an outside billing service, has it lived up to your expectations? Does the contract include follow-up by resubmitting rejected claims? If not, your practice may be losing money. Even if your contract has an automatic renewal clause, you may still be able to cancel or revise it if you're not satisfied.
Employee benefits - With the price of benefits such as health insurance climbing faster than inflation, it may be time to modify the package you offer, possibly requiring employees to pay more to help cover the cost hikes. An alternative is to utilize more part-time help that does not require full benefits.
Medical supplies - You may be able to negotiate a discount by agreeing to buy all supplies from one vendor for a given period. Make a list of your practice's top 15 or 20 supplies and ask your vendor, and a couple others, for their best prices. Ask your vendor to match any better deal you get elsewhere.
Insurance (other than malpractice) - Obviously, the cheapest policy isn't always the best, but check and see if you have duplicate coverage or insurance you don't need or can't use. If premiums are high, consider having another insurance agent look over your policy, evaluate your practice's needs and provide a quote.
Phone service - Is your practice using all the features it pays for? Does your medical association have a buying group for long distance service?
These are just some of the areas where your medical office may be wasting money. If your practice's overhead expenses are too high, consult with your accountant for more potential ways to reduce them.