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When was the last time you took a hard look at your expenditures to help increase profitability?
It’s likely you’re spending less time at your practice because patients are leery about coming in for an office visit as a result of the COVID-19 pandemic. The impact it’s having on practice revenue is daunting, especially for independent physicians.
Obviously, revenue generation is necessary to sustain your practice. But what about the other side of the cash flow coin - reducing operating expenses? When was the last time you took a hard look at your expenditures to help increase profitability?
Now is the perfect time to evaluate your expenses, cut out any fat and seek better terms with your vendors or find new ones. Here are some common areas where you may be able to reduce costs.
If you’ve been using the same tech support person forever, it’s probably time to shop around. The number of tech support people has grown exponentially over the past decade.
It’s difficult for solo or small group practices to negotiate lower pricing with large medical suppliers. Discounts are based primarily on volume. Local or regional suppliers may be more willing to win, or keep, your business at better prices than you are paying now.
Are you still paying for outdated or unused equipment? Are your lease terms reflective of the current economy and interest rates? Eliminate unnecessary rentals where you can, and negotiate new terms for your leases.
Take inventory of what you have, and determine what your short-term needs are. Use the internet to shop around for the best price, and order in smaller quantities.
Do you even know what’s lumped into this category? If not, it’s time to find out.
There are plenty of options. Compare the national and regional phone carriers as well as Voice over Internet Protocol (VoIP) carriers.
Shop website hosting companies. Don’t pay a web developer for website hosting or to make simple copy changes on your site. Most websites have a built-in content editor that lets you make your own changes without having to pay someone to do them for you.
Talk to a health insurance broker to find the policy that best meets your coverage and financial needs.
Assess all vendor contracts, including leases, rentals, payment terms, credit card rates and merchant account rates, and negotiate more favorable terms.
No one wants to lay off staff, especially when the economy is reeling and the unemployment rate is escalating. Talk to your staff and find out what their needs are. Do you have anyone who can change from full time to part time? Is anyone willing to be furloughed until things improve?
Trimming operating expenses can save your practice thousands of dollars a year. It’s something we recommend to every practice when we transition them to concierge medicine. With reduced expenses, and the annual membership fee, the practices we work with have seen little economic impact from the pandemic.
Remember, the downturn in the economy is affecting most companies, and no one is going to want to lose your business.
Neil R. Hoyt Sr. is a health care executive who has been transitioning practices to concierge medicine for the past 16 years. Send your financial questions to firstname.lastname@example.org.