expense management Archives

Cost-cutting: pick your battles wisely

We recently worked with a smart, energetic practice administrator who was very motivated to improve his practice’s bottom line. He’d already found significant savings by switching billing and phone services (even getting better billing results, to boot). Spurred on by those successes, he’d turned his attention to clinic staffing. While the physicians in his practice mostly used conventional medical assistants (MA) for support, a few of the doctors and non-physician providers (NPPs) had opted to use “scribe assistants.” These hybrid staff help clinicians by both scribing during the visit and handling typical MA tasks like test orders and scheduling follow-up care. Because of the extra duties, and because they were hired through an agency, their hourly cost was a bit higher than for the MAs – a 15-20% differential that caught the administrator’s attention. The administrator estimated the hourly cost of hiring a new MA would be about $20, including taxes and benefits. The scribe assistants, meanwhile, cost the practice about $24 per hour. The scribes did some tasks the MAs weren’t trained or expected to do – notably, scribing. But the administrator believed that at least one of the NPPs who was currently using a scribe assistant could do just fine with an MA (she was a recent grad and tech enthusiast). So the administrator decided to suggest gradually switching some of the contracted scribes with employed MAs – and was surprised that his idea met with resistance. (After all, 18% would be a significant cost savings – yet even some of the partners resisted the idea!) As the administrator repeated his idea at a few monthly meetings in a row, the resistance grew into a testier conflict. Was the conflict a sign the administrator was wrong to bring up the idea of saving money on clinical staff? We wouldn’t say “wrong” per se – but we might have not have prioritized this particular cost-saving avenue. It’s natural for clinicians to be wary of any changes to clinic staffing. Clinical support staff is essential to physicians’ productivity. Anything that disrupts clinic flow can make it harder for physicians to

By Morgan|2022-01-01T22:51:45-08:00October 15th, 2018|

Don’t confuse personal finance and business finance [practice management tip: financial management]

When presented with ideas to update your medical practice’s technology, better support your clinicians, or market your practice in a new way, is your go-to reaction “we don’t need that” or “we’re doing fine without it”? Is your financial management approach simply to always minimize expenses? (Perhaps because you remember the old maxim of taking care of the pennies and the dollars will take care of themselves – or, its more modern cousin, “the latte factor”?) If you’re thinking about business spending in the same frugal way personal finance experts recommend you run your household, you may be missing out on opportunities to grow and increase your profits. Keep it up long enough and you may jeopardize your practice’s future profitability. The good advice to skip a few lattes and pocket the money simply doesn’t correspond to many business expenses. While a latte is a fleeting pleasure, upgrading practice technology is an investment that can increase productivity for months or years to come. Similarly, keeping headcount at the number needed to “get by” may mean your physicians, NPs, and PAs will be less productive – an opportunity cost that quickly outpaces the “savings” from bare-bones staffing. Just because a business investment requires a decision doesn’t mean it is analogous to that forgone latte that puts money in the bank. Not pursuing an investment may actually cost more in terms of lost revenue and profit. Over time, under-investing in productivity tools, visibility for your practice, and modern, convenient patient service can make it harder to attract patients and retain staff. Rebuilding from that sort of decline can end up being much more difficult and costly than investing in keeping your practice up-to-date and well-staffed would have been. Before rejecting investments in your practice’s infrastructure, marketing, and staffing out of habit, be sure you’ve considered whether the upside you’ll pass up is greater than the savings.

By Morgan|2022-01-01T22:51:47-08:00April 17th, 2018|

Using benchmarks wisely: staff, staff expense per provider

Our work with medical practices often involves analyzing a practice's data against benchmarks from sources like MGMA, NSCHBC, specialty society surveys, etc. But, it's not enough just to compare against the averages and percentiles; you have to know whether meeting or beating a benchmark is a good thing. Believe it or not, this is not always obvious. Among the benchmarks most subject to misinterpretation are staff per provider and staffing expense per provider. Most physicians and practice managers we work with are very focused on keeping headcount and staffing expense low -- and so they're pleased to learn they're in the lower tiers for headcount and staff expense ratios. The pleasure shifts to confusion, though, when we explain that squeezing staffing down to the lowest possible expense is not usually a path to higher profitability -- and can often be associated with lowering profitability! There are several reasons for this. The most important is that well-trained, well-paid, motivated staff -- and enough of them -- free up providers to focus all their attention on the tasks only they can do. Coincidentally, the tasks that only providers can do are almost always also the only tasks that generate revenue for the practice. Increase provider time spent on revenue generating activities (and not on unpaid tasks that don't require their training), and you're on the way to more profitability. Consider that an additional medical assistant might cost a practice about $100-$150 per day. If that additional assistant allows a practice to see as few as 1-2 more patients per day, that's a profitable addition. Often, one additional assistant can help more than one provider -- and help the practice quickly generate more revenue than is needed to make the addition a profitable one. When a practice is focused primarily on expense control and minimizing headcount, sometimes that results in providers doing too many tasks that could be handled less expensively by staff -- an opportunity cost for the practice and a direct hit to revenue potential. What's more, when a practice is too reluctant to add headcount, existing staff can quickly become

By Morgan|2022-01-01T22:52:09-08:00March 3rd, 2014|

13 for 2013 Tip #5: Review your maintenance contracts

Starting a new year is a great time to review your equipment maintenance contracts and evaluate alternatives. Independent service organizations compete for your business -- if your contract costs keep rising, consider putting your contracts out for bid. In some cases, rising maintenance costs may also mean that replacing outdated medical equipment is more cost-effective than continuing to service older assets. The same thinking applies to office technology assets. If the Geek Squad tech who helps you fix your PCs or your network is on a first-name basis with everyone in the office, you may be better off upgrading. And practice management software that requires costly upgrades may be better replaced with a cloud-based solution that updates automatically.

By Judy Capko|2013-01-15T14:32:54-08:00January 15th, 2013|

Inspiration from small businesses

I recently completed a series of articles for Kareo's Getting Paid blog about how small business management issues relate to practice management. While medical practices have an important mission that reaches beyond business, they can't achieve that mission without succeeding on business terms. And, in many fundamental ways, medical practices are not so different from other kinds of small businesses. There's a lot to be learned from examining the success factors that apply to seemingly-unrelated businesses. Plus, it's kind of interesting and fun to think about other businesses in the 'real world' and how they deal with their challenges -- almost like looking at your own organization through a different lens. If you're interested in checking out the Small Business Lessons for Physician Practices series, here are the links: Small Business Lessons for Practices: Human Resources Getting Started with Marketing Financial Basics Operations Management for Physician Practices

By Morgan|2022-01-01T22:52:40-08:00January 9th, 2012|

Prevent and uncover embezzlement: webinar

Joe and Judy's recent webinar (sponsored by Kareo) was a big hit! If you didn't have a chance to attend 'live,' you can register and view it here: Embezzlment-proof your practice Most medical practices are victims of embezzlement at some point -- yes, you read that right! -- so if you haven't already learned how employees can become thieves and employers become marks, this is a must-watch webinar.

By Morgan|2011-11-18T11:27:10-08:00November 18th, 2011|

Get a clear picture of practice performance: Part 1

To begin your quest to understand how well the practice is performing is to compare last year’s financial performance to the prior year, examine shifting trends and identify the reasons these shifts are occurring. For example, are you doing less of a particular procedure and, if so, is there a reasonable explanation – or if one physician’s production took a dip was it due to more scheduled time out of the office or is it an abnormality that needs to be addressed. Perhaps one urologist’s aged receivable has spiked because of a payer contracting issue. Identifying these types of issues is a good start to managing finances better. It is also important to compare performance to your peers by obtaining the Medical Group Management Associations Cost Survey (if it includes your specialty), www.mgma.com and The annual Joint Statistics Report from the Society of Healthcare Business Consultants, www.nschbc.com. In a group practice it is important to look at the group as a whole, as well as the some specific numbers and benchmarks for each physician. Examine group performance based on the per physician averages to evaluate and manage income and expense trends and staff levels. For example, how does the practice compares to the average practice in your specialty around the country? • Number of full-time equivalent staff • Gross charges • Percentage of contract adjustments • Gross revenue, expenses and net profit • Operating expenses as a percentage of gross revenue If you simply want to know # of FTE (full time equivalent staff) and percentage of operating expenses against revenue let me know: Go to www.capko.com Capko & Company your source for practice improvement

By Judy Capko|2011-06-08T13:22:21-08:00June 8th, 2011|

Where Accounts Receivable Headaches Begin

Collection problems don't begin with a rejected insurance claim or a patient's failure to make prompt payment. The headache of managing the accounts receivable starts with the patient registration form - data collection. It' s the receptionists and schedulers failure to gather sufficient and accurate financial data when patients first contact the office. Why does this occur? It happens because we fail to train the receptionists and schedulers on billing matters. They need to view the patient registration form and the insurance cards as financial documents - much like a credit application. Spend more time on the upfront training with these staff members and educate them about the consequences of poor data collection: rejected claims, delayed payments and an inability to collect the patient's portion of the bill after the fact. Set up accountability standards for data collection. Establish a reporting mechanism that tracks the reason for rejected claims. Start looking over this information to identify the most common errors that cause claims to be rejected. Then train staff on better data collection techniques to overcome these problems and show them their progress each month. The staff of good intentions. In reality the scheduling and reception staff have good intentions, but if you don't train them and help them understand the details essential to collecting accurate demographic and insurance data, then you are a part of the problem. Help staff's good intentions turn into better performance. You will improve revenue and save time! Capko & Company, experts in medical practice management and marketing.

By Judy Capko|2022-01-01T22:52:55-08:00April 22nd, 2011|

Profit with a Clear View of Your Practice’s Competitive Landscape

Whether you're contemplating expanding your practice, starting a new practice, or simply wondering what your practice's profit potential might be, your profits depend on your understanding of local patient demographics. With a host of free online services available, it's easier and less expensive than ever to understand your area's demographics and how they might represent threats or opportunities. You need to know how well your area is being served by your practice-type! One very useful website is www.city-data.com that supplies wide-ranging demographic information on thousands of communities. Among the most telling information is the population and growth trends of your service area -- where your patients come from or nearby areas new patients could come from. Often service areas are defined by geographical barriers, valleys, rivers, etc.. When we work with medical practices, we find that compiling data from the various communities in their service area (and other areas of interest) in a spreadsheet is invaluable. First, we take note of these population demographics: total population, population growth, income and, naturally, any demographic segment particular to your type of practice, such as women, children or the elderly. Next, combine the separate community data so that you can have a single figure for "service area" for each demographic segment. Now that you've compiled data to define the demographics of your service area, you can compare how your service area compares to nearby or similar-sized areas anywhere in the country. Is there a relatively high, low or average number of your practice-type in your service area when compared to similar other regions? You'll need to employ your first-hand knowledge to help you define the "service areas" that compare to yours. Be mindful of population density, income and geography and you should be able to identify at least two competing service areas. You can plug these data from their respective communities into your spreadsheet to calculate the same measures you have for your service area. Now that you've become somewhat of an expert on the population, it's time to gather information on the physicians. You'll goal is to find the number of physicians (FTEs)

By Joe Capko|2022-01-01T22:52:56-08:00March 8th, 2011|

Get What You Deserve

Are you taking a hit on revenue?If you are not analyzing your reimbursement from different payer source and don't have a clear understanding of what it cost to see a patient you may be taking a hit that you can't afford.Start with understanding the basic cost for you to see a patient. Take your practice operating expenses for the past twelve months and add in the physicians' salary and payroll taxes to know your true costs. Divide this by the number of patient visits last year and you have a good starting point.Next examine payer performance. You can determine the average per visit reimbursement by payer by dividing the number of visits by the total payments for each particular payer. Now you you have a concrete number you can compare to your cost to see a patient. If you aren't getting paid more than it cost to see a patient and make a reasonable profit its time to think about what actions you can take to reverse this.Need help? Contact Judy CapkoJudy is one of America's leading practice management and marketing consultants. e mail judy@capko.comAnnouncing the release of the 2nd edition of the runaway best-selling book Secrets of the Best-Run Practices. To check it out go to www.capko.com and click on the book icon.

By Judy Capko|2011-03-13T12:22:56-08:00May 10th, 2010|