We can all agree that saving money is a good thing. Cutting down on expenses, increasing revenue and making your practice more efficient all sound great. However, this is often easier said than done. The typical overhead for a family practice is around 60% of revenues. This means that working to control practice expenses needs to be a main concern.
Chances are, you are spending a lot on your employees. As the largest expense in any family medicine practice, staffing needs and expenses are a good place to start cutting costs. Besides just their salary, there are many more medical practice cost savings to take into consideration.
This first thing you should do is get baseline measurements for your practice. Get with your accountant to see what your overhead percentage is and generate an expense report. On that report, you should have categories like staff salaries, supplies, and building and occupancy costs. From there, you can see where you need to cut spending and costs and come up with an action plan.
Staffing Needs and Salaries
First, look at you staff as a whole and start thinking about anything that could be done more efficiently. Think outside the box here. Is there a task that takes up too much time? Is there a full-time employee only doing the work of a part-time employee? Are all employees essential?
Next think about their salaries. Compile information about the normal salary rate for the positions in your office. Next, develop some policies that will set salary ceilings and that will control the amount of an annual raise.
Even though these medical practice cost savings decisions can be hard to make as you might have to let go or demote a few people, they are important for your practice in the long run and should pay off.
With health insurance costs skyrocketing, it’s important to get yours under control. First, review your current health insurance coverage for your employees. Do you offer plans with lower deductibles? Do you offer plans with dental? Have you tried negotiating with your health insurance company or looked for a less expensive one all together? Depending on what you can afford, you will need make some changes. You may have to offer employees a plan with higher deductibles or insurance without dental.
Sick Leave and Overtime Payment
What are your written leave and overtime agreements with your staff? Do you have these policies in place?
The industry standard for sick leave is about 5 days a year and 2 weeks a year for vacation time. If you are offering more than this, re-consider your policy. Also, re-consider offering employees cash payouts for unused sick time. Since this is a contingency benefit, a cash payout is usually not required. If your employees grumble at this idea, you can offer to have their unused sick days carry over to the next year.
Don’t forget to think about your overtime policy as well. Make sure that you have written policy and that employees are held accountable for the amount of overtime used. It’s a good practice to have your staff let you know when they are going to stay beyond their shift so that you can control how much overtime pay they use.
Make sure that all of your policies are written and agreed upon by your employees. That way, there is no room for speculation or misinterpretation.
While it can be difficult to begin medical practice cost savings with your employees, it’s often the best place to start. After the initial tough changes, you should be able to see more profitability that will hopefully make the cuts worth it.
Boulevard LA specializes in custom, state-of-the-art medical and dental office space in Downtown Los Angeles. We have worked with clients like Quest Diagnostics, USC Fertility and Perinatal and nonprofit community clinics. Because we understand that every practice is unique, we can provide a custom space for your office