Managing Your Practice

Tips to Save Your Practice Money Now


Physician office overhead costs are up; reimbursements and collections are down. But don't despair.

There are ways to save money and tilt your balance sheet in the direction of a healthy bottom line. Here are some cost-saving tips:

Maximize tax-free benefits for you and your partner(s). Don't forget to deduct payments for malpractice, major medical, disability, life, and liability insurance. Personal expense account charges are deductible as well, including the cost of attending CME meetings; dues and subscriptions; and as much as $45,000 a year for retirement spending.

Stretch your office services by hiring midlevel providers. Salaries for nurse practitioners and physician assistants can quickly reach the “break even” point and can begin to increase the profits of the practice once these practitioners perform 10–13 visits a day.

Reevaluate your ratio of front office to clinical personnel. A good ratio is 1 physician to 3.5 clinical staff. Better is 1:3.4 if your office has a lab and 1:3.2 if your office has no lab. A ratio that's too low is 1:2.8 or 1:2.3.

Charge patients for simple but time-consuming tasks. Consider charging a fee for filling out forms for camp, for one.

Save on purchasing supplies. Become part of a physician buying group (PBG) for office supplies, medical supplies, and lab supplies, and especially vaccines. Such groups have the potential for saving a practice 10%-25% on “big ticket” items, and thousands of dollars a year on vaccines.

Renegotiate your rent. Commercial real estate? They're hurting right now. Any physician or group whose lease is expiring within 2 years should renegotiate now. Some landlords are offering 3–6 months of free rent in exchange for a renewal of an office space lease. Another option, especially in light of the current, dismal commercial real estate market, is to consider buying your own building while prices are low.

Stretch the use of your office space. Could you accommodate another provider and expand your business hours from early morning to late evening, with physicians staggering their hours? Could you sublease space during off-hours to a lactation consultant; a physical, occupational, or speech therapist; or a registered dietitian who could provide nutrition counseling and diabetes education?

Target missed appointments. Automated dialing systems can make reminder calls and reduce expensive no-shows if this is a problem in your practice.

Consider participating in clinical trials. It's a lot of work, but adding research to a medical practice can be rewarding and intellectually invigorating, as well as profitable, infusing up to $100,000 a year into a practice's bottom line. The concept works only as long as a dedicated physician wants to take on the role of principal investigator and at least one office staff member can devote the bulk of his or her time to coordinating the trial(s).

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