Unlike many other businesses, medical practices can’t pass on rising costs--such as increasing rents, employee salaries and utilities--to their customers, or in this case, patients. But they must find some way to control them.
Indeed, physician practices report an increase in overhead costs, according to Physicians Practice. The 2016 Physician Compensation Survey by the publication found that in the course of a year, 8.4 percent more respondents reported that overhead costs were close to or exceeding half of their practice revenue.
“Unlike most businesses that can pass along increased expenses to consumers, primary care physicians can't do that because of governmental regulations and the way that health insurance companies operate,” Steven Fisher, M.D., an internist at Fairfield County Medical Group in Trumbull, Connecticut, tells the publication. Administrative costs are one major factor that has increased expenses for practices.
So medical practices must try and lower their overhead costs. Here are some steps they can take:
- Examine each line item on profit and loss statements to determine where money is going, says Fisher. Look for places where the practice can spend less or where money might be wasted. For example, a medical office might be able to shop for a better price on malpractice insurance, he says.
- Put a policy in place to collect payments at the time of service. Practices can save money by not having to bill and rebill patients. Fisher’s practice requires all patients with high-deductible health plans to keep a credit or debit card on file so payments can be charged against it.
- Keep an eye on costs from companies that provide equipment, supplies and services, says consultant Charlene K. Mooney. Periodically consider renegotiating contracts or shopping around for other service providers.
- Think about ways to increase revenues. One way is to offer new services, such as adding imaging and laboratory services, says Mooney. Consider performing in-office tests, such as hearing, asthma and drug screens.