Sneaky Ways to Cut Medical Office Expenses By Daniel Casciato A D V E R T I S E M E N T A D V E R T I S E M E N T Making efficient use of your resources is important to building a successful medical practice. However, decreased and delayed payment claims from insurance companies as well as decreases in patient loads have forced many practitioners to start cutting back on operating expenses. Reducing office expenses is much easier than you think; it just requires some creativity. With some minor no-cost to low-cost adjustments, you can trim expenses while improving your net operating income. Here, Medical Office Today offers five ways to get your office expenses under control. 1.    Track Your Expenses First, make sure your practice has the latest up-to-date numbers and information about all of its expenses. For instance, do you how much you are spending monthly on bathroom supplies, janitorial services and your telecommunications services?  Keep a simple spreadsheet so you can track these expenses and at a glance be able to know how much you are spending. 2.    Making Behavioral Changes Changing your staff’s bad habits of leaving the lights and computer on overnight is one way to reduce your monthly expenses. Advantage IQ, a Spokane, Wash.-based firm that measures and analyzes a company’s resource management process, such as energy, water, and waste, offers an energy awareness program for its clients. On average, the firm has seen its medical office clients reduce monthly operating costs between 2%-5% by making minor changes. If they invest in new energy efficient equipment, costs have reduced up to 20% in some cases. “From the behavioral standpoint, we can train staff on how to utilize and maximize the use of their lights,” says Jim Poad, director of client solutions for Advantage IQ. “For instance, we would train them to understand when they can and cannot turn off lights or equipment. For computer office equipment, we urge them to use the power down feature on computers.” There are also a few ways that medical offices can reduce water usage, which can carry a hefty price tag in many cities, especially those with water shortages. Across the nation, water and sewer expenses are increasing, and if these expenses aren’t covered as part of your lease, or you own your own building, you could be wasting money and water. “One way is to check for leaks at faucets, toilets and urinals, hydrants, hot water systems and the irrigation system,” says Poad. “One small leak can cost a business a bundle if not properly prepared.” You should also make sure the water fountain is functioning properly. Finally, if the medical office owner owns the building, check the irrigation system schedules to make sure that no over-watering of landscaping is occurring. 3.    Evaluate Your Service Providers Are you getting the best prices from your existing vendors? Re-negotiating contracts with existing vendors and service providers is an effective and easy way to reduce expenses. Nick DeFrancesco, CEO of Hartford, Conn.-based Co$t Reduction 101, suggests sitting down with your current vendors and brainstorm on how to reduce costs. “Make sure they understand you’re serious about this and if this discussion does not lead to satisfactory results, you will look elsewhere,” says DeFrancesco, who has nearly 40 years of healthcare purchasing experience.   For example, DeFrancesco says your waste hauler can reduce its number of weekly pickups; your lawn maintenance crew can mow the grass less frequently; and if you have a shredding company, they can come in less frequently as well.   “In many cases, you’re paying for routine services on a frequency that makes no sense just because it has always been that way,” he says. In addition to cutting back on the frequency of these services, some vendors are willing to be flexible with payment terms. “Most vendors are net-30 days,” says DeFrancesco. “Some customers extend it to 45 to 60 and most times, the vendor does not complain. They’re happy to get paid in 60 days versus what they go through with the majority of customers who could be out to 120 days.”   Another approach is to see if your vendors are willing to work out some kind of barter arrangement, providing some kind of healthcare service in exchange for a facilities/medical office related service. Also, don’t rule out re-bidding your service needs. For example, you may want to contact two to three janitorial services and have them bid on your work. If you do this, talk to your colleagues to find out who they use and include them in a bid process.   “I would tell the incumbent vendor that is my plan and if they want to do something upfront I would listen, but I would not give them the opportunity to match better pricing after the fact,” says DeFrancesco. One service that DeFrancesco says should be left alone is parking. Physical access is an important component to the overall patient and visitor experience. In fact, a 2009 report by an independent healthcare ratings organization, Health Grades, indicated three out of five patients nationwide listed physical access as their top complaint. 4.    Examine Purchasing Habits Supply costs can sometimes overwhelm a medical office. To minimize supply costs, one suggestion from DeFrancesco is “coattail” purchasing. “If you’re tied into a hospital, seek assistance from the hospital purchasing department,” he says. “Request that the purchasing department notify the vendor of your relationship to that hospital to better leverage prices. Unfortunately, without follow up and persistence this does not usually lead to real savings.” If you are not affiliated with a hospital, consider joining a group purchasing organization to take advantage of group discounts for medical and office supplies. Group purchasing organizations are usually no cost for a medical office to join since the group earns administrative fees from vendors based on sales. “For instance, a pediatric practice may save a great deal of money on vaccines if they join a group purchasing organization, especially since vaccines represent one of the largest expenses in primary care after personnel costs,” says Elizabeth Wertz Evans, president and CEO, of PANDA and Associates LLC, a healthcare consulting firm in Pittsburgh, Pa. “A practice can save $10,000 or more depending on their volume.” Also, is there a common list of equipment/supplies, or does each physician want a specific brand?  Through compromise, a practice can reduce the variability and save money as well as the staff time it takes to order different items. 5.    Use a Benchmark Another reason to consider joining a group purchasing organization is the ability to use it as a benchmark. “It serves as a great benchmark in terms of comparing pricing to what they do now on their own,” says DeFrancesco. Curious as to how your utility usage compares against similar facilities nationwide? The Energy Star website can serve as a benchmark to see how you fare. Additionally, organizations like Advantage IQ have their own benchmark system. Advantage IQ uses its patented Performance IQ system. Its system provides secure web access to intelligence within an office as well as each facility—if the organization is multi-site. “The data stored within Performance IQ can be used to create standard or custom reports, from which strategic procurement plans are able to target specific inefficiencies that are unique to each office,” says Poad. In your quest to reduce expenses, however, Wertz Evans cautions that there is a threshold on how far you can go in trying to be frugal with some of your activities. “If you’re cutting back or reducing services or personnel, it’s imperative that you do not compromise patient safety,” she says. Poad agrees: “You still have to maintain patient comfort. You want to come across as doing the right thing for economic and environmental benefits, yet at the same time, safety and patient comfort are critical factors and must be taken into considerations when considering reducing costs.” Email this Article...