APMA News - November/December 2012 - (Page 72)

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 Without Compromising Your Practice QUESTION: My income is down. How do I reduce my expenses? ANSWER: Physicians across the country (and across specialties) are frustrated by declining reimbursement and increasing operating expenses. Many group practice costs rose 35 percent in the past 10 years, but revenues have only risen 21 percent. If you are about to embark on a cost-cutting campaign, be smart about where you slice. Taking a machete to operating expenses may seem like your only option at first, but the long-term costs can be much higher if you are not careful! Before you slash your budget, understand the numbers on your Profit/Loss (P/L) statement. Most practices’ P/L statements do not provide the right level of detail. Physicians typically see a category with big dollars—like salaries—and immediately want to decrease expenses by a certain percent. Categorizing your expenses in more detailed “buckets,” or line items, is a good step toward effective cost cutting. For example, a line item called “supplies” does not tell you enough. There should be detailed subcategories such as medical supplies, administrative supplies, orthotic supplies, and so on. For salaries, you need to see the breakdown of staff benefits, payroll taxes, education expenses, and overtime. Compare expenses and overhead against national benchmarks, such as data available from the American Academy of Podiatric Practice Management’s Annual Survey. If you find your practice spends more than others on specific line items such as salaries, supplies, or rent, examine the details and determine the reason. But remember, national averages are just that—averages. If you find you spend more on staffing, evaluate how your practice might be different from others. For example, if you offer extended hours or a great deal of ancillary services, your staff expense percentage might be higher, but your volume and services may drive higher revenues than other practices. Consider carefully before cutting staff. A wise business proverb says, “If you need something, you pay for it whether you buy it or not.” The overtime that might result from an overly busy staff could cost you more than what you hoped to save, and it may contribute to employee burnout and turnover. Don’t go too lean when it comes to technology, tools, and training. Requiring employees to share computers will reduce productivity. The staff member who “can’t get on the computer” can’t do his or her job. If you skip paying for ongoing software training, preferably directly from the vendor, you risk the computer not being used to its fullest potential. PCs now cost less than $1,000, and ongoing training will catapult efficiency more than it will set you back financially. 72 APMA News November/December 2012 Slicing staff education is another questionable way to trim expenses. The revenue lost by not attending a coding seminar may cost much more than the seminar registration fee. Finally, avoid skimping on tools that increase efficiency and compliance with mandates. Investment in an EHR system will not only save countless hours of filing, dictation, and transcription but also will preclude future expensive fee schedule adjustments. You can cut some costs without putting your practice in peril. Evaluate advertising costs. Many practices advertise without a well-researched marketing plan, complete with a measurable return on investment. You may be able to reduce some advertising costs that have already hit the point of diminishing returns for your practice. Buy supplies in bulk. Frequent shipping costs money. Too much inventory on hand, however, will tie up your capital. Monitor your inventory carefully by assigning a staff member the role of inventory coordinator. He or she should negotiate the best deals from competing vendors. But watching the cost of supplies is only part of the picture. Be sure that billable supplies receive reimbursement that at least equals their cost. Competition among phone service providers can be a boon for practices looking to cut costs. Allow competing phone carriers to analyze your existing call patterns and volume, and let them offer you a better service package. Analyze your accounting services. Many practices pay $1,000 or more per month for what is essentially bookkeeping work and payroll. Consider outsourcing payroll and making someone in-house responsible for accounts payable. Have you done a lease-versus-buy analysis of what your leased equipment costs? Sometimes an outright purchase is wiser than leasing. Your accountant can help ensure you’ve made the wisest investment in your equipment and furnishings. Finally, look at facility costs. Be realistic: Does each physician need a private office? Are all exam rooms used to capacity during every office session? If the answers are no, it may be time to reassess the unused space. Could you use the space more effectively by fitting it for in-office dispensing or a diabetic shoe program? If you have satellite offices, ask your accountant to help with a cost-center-allocation analysis to determine if those offices are moneymakers or balance-sheet breakers. Satellites can bleed dollars and drain physician and staff energy. n Contact Dr. Guiliana at Jguiliana@aappm.org.

Table of Contents for the Digital Edition of APMA News - November/December 2012

APMA News - November/December 2012
President’s Message
Contents
United States of Diabetes
Corporate Partners and Members: A History of Generosity
Tradition of Leadership: APMA Executive Directors Move Podiatric Medicine Forward
100 Years of Chiropody History in the UK: A Personal View
Annual Scientifi c Meeting Registration Form
2012 Podiatric Practice Survey: Age and Gender by Practice Arrangement Type
APMA By the Decade: 2002–2012
Reimbursement
Federal Advocacy Forum
Cosponsors to the Equity and Access for Podiatric Physicians Under Medicaid Act
APMAPAC Contributions in the 2011–12 Election Year
APMAPAC Chair Report
IT Consultant
Website Wisdom
Technofi
Small Business 101
CPME Update
APMA All Stars
Resolutions Deadlines
In Short
Worthy of Note
Affi liates Corner
Insurance Advisor
New Members
Death Notices
APMAPAC Update
Classified Advertising
Dates to Remember
Advertising Index
10 Questions
Your APMA

APMA News - November/December 2012