Is cost cutting on your schedule today?

Over the years I've seen dozens of ways to save money in a medical practice. A few of my favorites are captured here in the sidebar.

Following is a typical array of medical practice overhead items, ranked from highest to lowest*:

1. Staff wages
2. Professional liability insurance
3. Rent
4. Payroll tax
5. Medical supplies
6. Health insurance
7. Retirement plan
8. Maintenance

*Precise ranking will vary somewhat depending on specialty. See how to order Cost Survey at www.mgma.com for industry.

An important issue: Four out of eight - clearly half - of these expenses are staff related. This is the most productive area in which to achieve significant and immediate savings.

Paradoxically, however, the best performing practices (as ranked by the Medical Group Management Association) generally have higher staff-to-provider ratios than other practices.

Therefore, it is critical to:

• Periodically study the roles and assignments of staff
• Closely monitor overtime
• Sometimes allow attrition without replacement
• Incentivize staff to take on additional responsibilities
• Re-deploy some staff to new and more remunerative uses of their time.

There are many ways to reduce practice expenses. How much time do you have to undertake such cost cutting...? Medical supplies. Moved to "contract pricing" with 3M, saving group 20% on $25,000 annual bill for fiberglass cast tape. Maintenance. Dumpster never full, cut trash service expense in half by negotiating smaller container while remaining bound to long-term service contract. At a different practice, accomplished the same by reducing frequency of pickups. Staffing. Utilized cross-training and attrition to eliminate outmoded roles and positions in practice. Periodicals. Eliminated subscriptions and related expense to take advantage of constant free promotional subscriptions. Telephone. When contract allowed, switched to non-phone company vendor saving $500 per month on toll and line charges. Terminated dialup internet access monthly charges at office which used cable internet. Professional liability insurance. Long-term agent assured group pro-rated premiums for part-time physicians were not available with particular carrier. Another agent brought in who could explain the insurer's standing policy on part-time doctors. New broker of record letter resulted in corrected rates and a $10,400 refund!