Try this rule of thumb for expense purchases

May 25, 2012

Feeling the pinch of overhead expenses in your practice? Learn how you can ease the financial strain.

Q: Help! Our practice is struggling not because we lack a steady patient load but because our overhead expenses are out of control. How can we get back on track and in the black?

First, follow this rule of thumb for expense purchases: If your practice overhead is 50%, every $1 of expense must bring in $2 of revenue to break even. Most practice overhead is 60% or more. Depending on the specialty, the target range should be 35% to 50%. To survive lower fees, review every line item of expense. Vendors often ask their suppliers for discounts, so you should do something similar. Put all your large expense items up for bid at least once a year. Review your staffing levels. The highest practice expense is staffing in most specialties.

Answers to readers' questions were provided by Thomas J. Ferkovic, RPh, MS, managing director of SS&G Healthcare Services LLC, Akron, Ohio. Send your practice management questions to medec@advanstar.com Also engage at http://www.twitter.com/MedEconomics and http://www.facebook.com/MedicalEconomics