- You may be able to reduce medical practice expenses by ensuring you don’t overpay on malpractice insurance through regular policy reviews and getting new quotes each year, efficiently managing supplies, and streamlining operational expenses, including office leases and utility bills.
- Enhance cost-efficiency by avoiding overordering, negotiating favorable terms with vendors, and exploring bulk purchasing for frequently used items. Seek out sales and volume discounts to achieve savings.
- Cut costs and improve efficiency by adopting digital tools to minimize paper usage, streamline billing processes, and Implement energy-saving measures.
As an independent practitioner, you focus on providing high quality healthcare to your patients. But, you’re also a business owner with a wide range of expenses. All business owners want to reduce costs, but as a medical professional you want to be sure that your service doesn’t suffer in the process. The average medical practice has overhead between 60% and 70% of its revenue. This includes everything from staff salary and benefits to medical supplies, insurance premiums, rent, technology and more. To decrease medical practice overhead, focus on items that won’t negatively impact your patient or employee experience. Here are seven areas to consider when you want to decrease medical practice overhead.
One of your largest annual expenditures is likely your malpractice insurance. Depending on your practice type and state, premiums start at about $4,000 a year and can go up to the tens of thousands. The typical practitioner pays about $10,000. To avoid overpaying, make a habit of reviewing your policy and getting new quotes each year. Make sure you’re also taking advantage of available discounts. You may qualify for a lower rate by being a member of an association or for taking a course on reducing your malpractice risk that some insurers offer.
2. Office Lease
Another way to cut costs is to review your office lease and compare it to available properties. If you’re not using your entire space, consider a smaller space or refinancing an office to another provider. Or, use the information you’ve gathered on market rates to negotiate with your landlord. While moving your practice could be inconvenient, it might save you money in the long run.
Take inventory of your supplies on a regular basis as to not order too much. If you have a contract with a supply vendor, review the terms and renegotiate where possible. And, check prices with competitors with a quick internet search. You may be able to save money by ordering supplies in bulk. If this is the case, make sure you’re only doing this for the things you use most frequently. Also, take advantage of sales. Contact your rep to ask about deals they’re offering this month. Check if you can combine vendors and qualify for a volume discount. You may be surprised at the number of overlapping products your vendors offer, allowing you to streamline your ordering and decrease medical practice overhead.
4. Outside Services
Review the outside services you use each year, like your patient linens supplier or document shredding. You may find providers that are less expensive or that offer multiple services so you can combine and save. Or you may be able to team up with other healthcare providers in your building and request a discount if you agree to use the same service on the same delivery schedule.
5. Paper Usage
Find ways to cut back on your paper usage. In place of paper, a growing online program is HIPAA-compliant digital tools. For example, you could send new patients links to forms that they can download and fill out at home before coming to your office. You can also look into services that allow your patients to complete and securely submit forms online. An added benefit of using online forms is that it speeds up your check-in process. This can improve patient waiting times.
Sending paper bills can be costly. You run the risk that patient payments are delinquent or overlooked and must go into collections. Instead, start asking all patients to keep a credit or debit card on file. This step eliminates the patients’ need to mail in payment and helps you keep costs down by reducing your own billing charges. If a patient doesn’t want to provide a card, require prepayment.
Finally, watch your utility bills and take steps to reduce them. For example, you can turn off all devices at the end of the day. Take it a step further by unplugging electronics or using power strips that can be turned off at the end of the day. Computers, scanners, copiers, medical devices and other electronic equipment use electricity even when they’re sitting idle or turned off. Also consider the kind of equipment you’re using. Switching from desktop to laptop computers can save 80-90% in electric usage. Whether you lease or purchase equipment, be sure to choose ENERGY STAR devices that automatically power down when inactive. This can help you save as much as 50% on your energy bill.
The Bottom Line
Reducing your costs can free up money to use in other ways. You can possibly provide your staff with higher salaries or more benefits, or invest in new equipment to expand the services you offer. Be sure to share your goals and ideas to decrease medical practice overhead with your staff. Your team probably knows what can be eliminated. Asking for employee input gives your staff ownership over the outcome and increases the chance of implementing these suggestions. And remember, minimizing costs requires everyone’s cooperation.