APMA News - June 2013 - (Page 52)

Small Business 101 From the American Academy of Podiatric Practice Management, the voice of practice management for the profession. By John Guiliana, DPM Reducing Overhead in Your Medical Practice As you might know from experience, money can easily leak out of your practice—both through obvious holes you haven’t plugged and through cracks you haven’t even noticed. In these days of changing and tightening reimbursement for medical care, you cannot afford a financially leaky office. Keeping a tight rein on your practice overhead takes time and calls for a disciplined, methodical approach. Over the next few months, I will outline concise methods of addressing your practice’s overhead. A Tough One—Staffing Needs and Salaries Staff costs account for the largest single chunk of overhead in any medical practice. Examination of your staffing needs is a good place to start. Savings related to staff costs are likely to result from difficult, emotionally wrenching decisions about staff cutbacks, demotions, and other measures that may hurt someone, leave you with an unsettling feeling of disloyalty to your staff, and threaten morale. Why not get the hardest part of the task over with first? I have found that payroll costs generally run approximately 25–28 percent of practice revenues. If your payroll runs higher than that, or if you have other reasons to believe you are paying more than you should in salaries, perform an organization needs-assessment. Essentially, the needs-assessment involves figuring out whether the tasks that occupy your staff are worth doing, whether each responsibility is assigned to the best possible person, and whether the whole operation is as efficient as possible. In other words, you need to know the right things are being done by the right people in the right way. One approach is to list all the tasks carried out by your staff, eliminate or modify any you consider unnecessary or inefficient, and then imagine the ideal staff for the remaining tasks. How many people, with what kinds of background and training, would you need? Now compare that personnel listing with your actual staff. Do you have two staffers doing the job of one? Are certain jobs being done by staffers who are overqualified—and therefore probably overpaid and underchallenged? Do you have anyone working full time at a job that could be redesigned to be handled by a part-timer? Are there ways of combining tasks that would save time or staff? Are there places where adding staff might help? For instance, is patient ﬂow so backed up that the practice’s lack of productivity is causing the overhead percentage to be even higher? Maybe you need more clinical staff. Similarly, if billing 52 APMA News June 2013 and collections are backlogged, you may need to add more collection personnel. As another alternative to leaving work undone or done at a pace that is too slow, consider outsourcing some billing, collections, and administrative work to vendors. Your salaries might generally be in line, but because of long-term employees who have been receiving annual pay raises for many years, perhaps you may be paying a couple of employees excessively. Even though you value your long-term Staff costs account for the largest single chunk of overhead in any medical practice. Examination of your staffing needs is a good place to start. employees, you are not obligated to grant large salary increases each year. Instead of awarding annual raises automatically, try to give no more than the prevailing average annual salary increase based upon inﬂationary changes, which ranges from 2 to 4 percent today. To provide yourself ﬂexibility, consider giving performance bonuses or incentives based upon meeting practice-wide target goals rather than across-the-board raises. Incentives can range from giving movie passes to giving $500 bonuses for outstanding performance on occasion, and they can make everyone involved feel good without committing you to years of maintaining a higher salary. Have you set salary ranges for each staff position? One approach is to start with the local average for a given position and establish a minimum salary 20 percent below that figure, and a maximum or ceiling 20 percent above it. Inform employees that their salary increases will slow down as their salaries approach their respective salary ceilings. Although raises and salaries depend on employee performance, length of service, and inﬂation, the bottom-line determinant is your own ability to provide those salaries, based on your practice’s finances. n Next month: medical supply costs and health insurance. Contact Dr. Guiliana at Jguiliana@aappm.org.

Table of Contents for the Digital Edition of APMA News - June 2013

APMA News - June 2013
President’s Message
Table of Contents
The Boston Marathon Bombings: Podiatrists on the Front Line
Committee Nominations Requested
What’s the Deal with Biomechanics? How One APMA Member Helped Jerry Seinfeld End Years of Pain
The New Wave of HIPAA Changes: The Final Omnibus Rule of 2013
APMA State Advocacy Forum
Resolutions Submission Deadlines
Emotional Intelligence and Residency Education
Practice Survey Data: Practice Owner Type
It’s All Happening at The National!
Annual Scientific Meeting Registration Forms
Annual Scientific Meeting Sponsors
APMAPAC Chair Report
Coverage Corner
IT Consultant
Inside APMA’s Social Media
Bylaws Propositions Due
Website Wisdom
On the Road with APMA
Small Business 101
CPME Update
Young Physicians’ Accomplishments
Worthy of Note
Affiliates Corner
New Members
Death Notices
APMAPAC Update
Development Update
Classified Advertising
Dates to Remember
Advertising Index
10 Questions
Your APMA

APMA News - June 2013