Operating Efficiency: Cost Cutting is Key to Profit in a Medical Practice Office

Running a medical office is no easy feat. There are staffing concerns, coding and billing frustrations and everything in between. In efforts to make healthcare affordable to patients, insurance companies are slashing rates and doctors are feeling the pinch more than anyone.

While the 2010 Obama Healthcare law doesn’t include requirements specifically limiting payment to physicians or restricting insurer’s arrangements with doctors, these insurers must keep prices low for exchange plans. In some cases this means a 24 percent cut in medical reimbursements.

With reimbursements dropping for medical providers, it seems the only way to increase profit is to see more patients. But are there other ways to save money? Of course.

Outsource Medical Billing

Medical billing is an area that trips up many physicians’ offices as a time eater and source of frustration. But all of that loss by way of time and revenue doesn’t have to occur if you choose a medical billing company that can offer unique, specialized services for your medical office.

Streamlining the process of billing in the medical field can be something of a logistical nightmare but it doesn’t have to be if you follow a few tips to help you select the right medical billing service.

The first thing to look for institutionalized process model, meaning full service offerings from processing to payment. Communication is another major factor. You want a company who actively communicates with you and insurance and can offer solutions or assessments to the way you bill patients. An actively involved medical billing company is well worth the money. And keep in mind, there are over 7,000 medical billing companies in the U.S. so take your time and make a smart decision.

Say Goodbye to Reps for Medical Supplies

It may seem obvious that buying necessary supplies online and in bulk are the best option when it comes to saving a buck, but practices still overbuy unnecessary supplies from local vendors who come in weekly and flash a smile.

To remedy these situations, first buy online and in bulk when appropriate, saving 3 to 20 percent on average by the way. If it is an item your office doesn’t use often, ask for partial shipments or save that item for smaller orders. Online shopping is not only the most convenient, but the cheapest. No longer are we in the days of a human being coming to the office to take orders. They are probably marked up the items to pay for that warm body in your office so consider online sales where you also save on sales tax.

Finally, have in place an inventory control system run by office staff, not nurses, and consider offering a financial incentive to the office manager for savings on supplies for the office. Making your office a culture of saving, and rewarding that behavior can make all the difference when pinching pennies on supplies.

Slim Up Office Operation

Checking the “vital signs” of your medical practice is just as important as checking vitals on patients. Some of these signs may seem minor but add up over time.

The first check-up is operational hours and days and hours worked by physicians, nurses and office staff. More and more practices are moving to extended hours, keeping their doors open on weekends and late evenings, but a practice must consider, is it worth it? The average family physician works about 50 hours a week but only 36 to 40 hours of that week are devoted to patient care; the rest is spent on administrative time and outside related activities.

Additional hours in a week obviously means the need for more doctors, nurses, and even support staff, so it is important to take a look at money coming in and going out to assess whether extended hours would be beneficial to your practice.

You can also slim up by keeping track of patients and visits per day. If you see a drop in patients, investigate why, and remember, the average visits per day for a typical family practice is 25 to 30 per day, which will of course vary based on the type of practice. Other things you can do to tighten up operations is to simply track expenses by category. Total expenses should average 60 to 70 percent of collections, staffing should be on average 20 to 25 percent of collections, and total supplies should on average make up 5 to 8 percent of collections.

Join the 21^st Century with Electronic Health Records (EHRs)

There’s been some controversy on this topic. Some argue EHRs are actually costing medical practices more money in the way of billing, but the benefits seemingly trump the negative speculations.

Switching to EHRs can reduce the cost of outpatient care by approximately 3% when compared to traditional paper record keeping. This may not seem like a lot, but it adds in more ways than straight monetary benefits. EHRs also have positive effects on productivity, record keeping, and security measures for patients. Savings are based in efficiencies so upfront cost may shock, but the system more than pays for itself when considered in long term.

Having one less person staff member in charge of managing records, and one less chunk of space taken up in your office means more flexibility with hiring and space saving techniques for additional computers that can of course also be used for coding and billing. Patients also report warmer feelings towards the movement to go digital since there are not physical paper copies of their personal information floating about the office trading multiple hands a day.