Medical Practice Management
Aug 05

Identifying hidden cost problems in Physician practices

Whether you directly measure it, every activity taking place in your practice has its own cost. Some are easy to identify; others—such as transcription, ordering tests, and attending meetings—typically go unmonitored. Such tasks involve too many cost categories—and sometimes relatively unclear benefits—to be easily monitored.

Because of this lack of information, you may accept and perpetuate subtle internal costs that remain very real but hard to recognize. Far better to use “process thinking” to evaluate them than to remain unaware of how they affect your effectiveness and efficiency. Here are five examples of unrealized costs plaguing all too many practices:

1. Too much staff flexibility. “Floating” staff positions for nursing and clerical tasks may seem helpful in accommodating unpredictable and varying patient demand, but they have a price. Sometimes such staffers cease being cost-effective because they lack continuity in their work. A floating staffer, for instance, may not be familiar with the physician’s methodology or the subtle nuances of scheduling patients for specialty services. That inexperience may slow down the practice or it may cause confusion and extra work for the regular staff. Sometimes you’re better served to pay your dedicated staff a little more. Incurring whatever expense it takes to always have the right people in the right jobs may make the practice more productive overall. This approach may cost more in visible dollars, but can save vastly more unrealized costs.

2. Skimping on support staff. As one of our consultant friends puts it, “Designing the least-costly staff mix is a popular but foolish obsession.” Let the type and amount of work drive the staffing arrangements, rather than vice versa. You accomplish nothing by having a skeleton staff, which leads to ineffective overall performance. Maximizing the productivity of your physicians and special equipment produces many times more income than limiting staff to preconceived levels.

3. Unnecessary phone calls. Letting patients call in about test results and other information just props up a reactive and potentially expensive policy; it’s usually a disservice to the patients as well. Those calls interrupt your clinical staff, tie up phone lines, and put your staff at the mercy of the patients’ whims on when to call and what to ask. Turn the process around: Set up a system for calling the patients proactively, even though it takes more initial preparation labor to make the process work smoothly for all concerned. Or subscribe to one of the many phone-in systems on the market today.

4. Unclear billing. Many patients do not understand their medical bills. This confusion spawns phone calls back to the practice for explanations, unnecessarily tying up staff. To test if this is true for you, ask your business staff how much incoming calls “spike” a few days after patient statements go out. The solution: Review your billing system to see whether it presents all appropriate information in a clear, patient-friendly way. You may find it less expensive to change the system, perhaps even upgrading the software, than to continue taking so many calls. Your patients will like it better, too.

5. Meetings, meetings, meetings. Meetings cost money, for they cut into your work force’s productive time. Limit meeting time to dealing with substantive issues such as organizational performance and market forces. Let someone, whether it be the doctor, the manager or a delegate, decide on peripheral issues. This person may need to touch base with concerned staffers before deciding, but you will save hidden costs if you keep the meeting time to a minimum. Think about it this way: When you compare the costs involved with the decisions reached, was the issue worth the expense of so many people’s time?

This nugget was adapted from Medical Office Financial Management: A Practical Primer, from Advisory Publications, a division of HCPro, Inc. Go to www.hcmarketplace.com or call our Customer Service Department at 800/650-6787 for more information or to order.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →