Keep more of your practice income

November 2, 2007

You can find many ways to cut costs without slashing staff. You just need to know where to look.

Key Points

Cost-cutting measures range from taking in a boarder to defray rent payments and staggering staff schedules to the simple act of picking up a broom. Some shave only a few hundred dollars off the annual expense budget; others save substantially more. Together they can add thousands to your bottom line.

Some doctors have managed to cut back on key expenditures; others have trimmed a series of smaller line items, or identified not-so-obvious ways to reduce costs. Physicians, administrators, and practice management consultants reveal their macro and micro cost-cutting strategies, and how to put them into action.

FP Robert Patterson in Sanford, NC, hears about the latest office supply bargains from his employees. "They even pick up paper on their way into the office," says Patterson. "We take advantage of the sales at Wal-Mart, Staples, or OfficeMax. We constantly try less-expensive brands and switch to them when we find the quality is sufficient for our needs."

That's not all they do.

Patterson, a solo practitioner, used to pay a janitorial service about $1,000 a month to clean the office six days a week. He initially lowered the bill to $200 by halving the number of visits and cutting back on the chores he expected the cleaning service to do. He's since quadrupled his office space but kept the janitorial bill low-only $320 a month. All without skimping on cleanliness, Patterson says.

"My employees show a lot of pride in our office, and each person is responsible for keeping their area clean," he explains. "Nurses take care of the exam room, while clerks make sure the front office is presentable."

While Patterson's entire staff pitches in, a single employee can find ways to trim expenses as well. Practice administrator Sharon Rentze, of Concentra Medical Center in St. Louis, recalls one group that spent thousands each year on knee braces for patients. Shocked by the cost, an RN suggested switching to a brand that cost $3 less but was just as good. "She saved the practice hundreds of dollars," says Rentze.

Employees will scrutinize costs more closely if they're aware of the practice's financial status and expect to share in the rewards of their saving efforts. Patterson's staffers, for instance, originally volunteered to do some of the cleaning, not only to protect their jobs, but to secure benefits and yearly raises. "If I had forced the janitorial duties on them, it would've been insulting," he says.

Make incentives explicit, consultants advise. Give your office manager, say, a $200 bonus if she reduces staff overtime by $5,000.

Shave staffing expenses without cutting staff

Representing about 50 percent of overhead in multispecialty and primary care practices, payroll is too big to ignore. But before letting any employees go, investigate these less painful ways to trim personnel costs.

Some employees may be interested in shorter hours. "A few years ago, our nurse wanted to slow down and take Fridays off," says cardiologist M.P. Ravindra Nathan in Brooksville, FL. "Since then, we've shortened our office week to four and a half days. Everybody likes Friday afternoons off. The staff is happy, and we're saving on salary."