With the current economic climate patients will have to continue to look for ways to cut back on expenses, and may well scale back on their healthcare expenditure. As practices we need to cut costs and improve margins. But with that said, healthcare professionals don’t necessarily have the time to get stuck into the financials. So, where do we begin? Simple: practical cost cutting. Let us count the ways.
Trim the contractual hedges:
Re-negotiate your rental
Rental is often the biggest expense for a practice, which means it can make a substantial difference to your margins. Due to the difficulty and complexity of
re-negotiating rental, most practice owners don’t see rental negotiation as feasible. Yet, the key is planning. Start by assessing your situation and what options are available to you. Is your rent reasonable when benchmarking other tenants in your area? When will your current contract end and is your landlord open to re-negotiating terms?
Let’s face it, employing the services of a Locum can be costly. It may be possible to avoid this expense if you start by looking at the timing of leave periods. Make note of when the practice is at its quietest and centre your leave around those dates. This is particularly effective if there are multiple doctors in the practice and may even mean you can avoid hiring a Locum altogether.
Even Locums have off-seasons. If you do have to take on their services, try to time it to when they might not have a lot of business. This will give you more room to negotiate with them. Take into account that there is also more than one remuneration model to consider. Speak to your colleagues about what they are doing and how this works for them.Where you have hired a Locum, make sure you get the best possible value. Consider that because your Locums have the unique position of moving from practice to practice, they have a fresh perspective and can help you benchmark your practice’s efficiency and effectiveness.
Rethink your admin processes
As a medical practitioner, how you bill for procedures and consumables can have a big impact on the bottom-line. When we looked at a sample of our clients we found that often consumables and procedures were either under-claimed or not claimed at all, and that procedure lines were often missing.
By assessing the most common type of claims submitted by these GPs, we were able to devise unique claim templates which allowed procedures and consumables to be included in the claiming. For example, looking at one of the pilot doctors before he started using these templates, the most commonly missed procedure was ‘Urine test’. After the ‘Urine test’ was automatically included in his claim templates, it brought in an additional annual revenue of about R 9 000 in 2015. Similarly, his most commonly missed consumable before he started using the templates was ‘Voltaren injections’. Once ‘Voltaren injections’ were added to his templates it brought in an additional annual amount of R 8 400 in 2015. Taking into account all procedures and consumables that were now being claimed for, this doctor grew his overall bottom-line by just over R 80 000 for the year.
Certain medical practice software (such as myMPS) offers claim templates that help you claim for all procedures and consumables. Good software alleviates admin and removes complexity from claim processing, ensuring that there are no errors. Claiming in full for the services you perform is essential for the health of your practice.
It all comes down to the time pressures of the medical profession. Often issues such as thorough reconciliation tend to fall through the cracks. In lieu of monthly reconciling, there is often a temptation to simply check the total figure on the bank statement to see if it is roughly in the ballpark of the previous month. Unfortunately, the devil is in the detail. Merely glancing at the bank statement gives very little explanation of why you arrived at that particular figure for the month. Without a regular reconciling process, it becomes very difficult to establish a benchmark or to know if your bad debt percentage is improving or worsening each month. This means a higher risk that money has been lost. If you are unable to do the reconciliation manually, it is important to look into medical practice software that can automate this process for you and give you a reliable result when you need it.
If you’re looking for more information on medical practice software solutions, contact us here. Our team will contact you to help you make your decision.
Beware of theft
Theft by employees is a major problem in business, especially where there are lax procedures in place. A good practice to adopt is a daily cash-up routine. In addition processes, such as matching invoices for every patient, should also be done daily. This will ensure that you are receiving all your dues or can quickly pick up on discrepancies. Whether this is done manually or through a medical practice software system, it is imperative to ensuring you remain profitable.
If you offer a dispensary service, make sure to take stock regularly. Your first point of stock control should be at delivery, where pilferage is a possibility. You need to check that what has been delivered matches the supplier invoice. Also, be cognisant of how much stock the practice starts with and then see that what has been recorded as dispensed tallies with a physical stock count. Any discrepancies need to be addressed with the dispensary department. Make sure to have a good handle on stock expiration dates so that you don’t sit with perished items that eat into your bottom line. Two things to think about in this respect are: An ordering cycle that looks at appropriate quantities of items to purchase in one go – to avoid items perishing unnecessarily; and, training your staff to restock shelves by placing the older stock in the front and newly ordered items at the back.
While a dispensary can serve as added value for your patients, low-profit margins and high overheads make it a minor contributor to your overall profitability. If you are looking for ways to reduce costs, consider removing this service from your offering.
Investing for profitability
Spend smart on technology
In a bid to cut costs many practices underinvest in technology, which can sabotage their efforts to remain profitable. The full benefits of certain newer technologies are only possible if you have the necessary means to access them. A past example of this is when you compare the modern smartphone to the now extinct “feature phones” (such as the old Nokia 3310). At the time when smartphones were introduced, some argued that the old phones did ‘exactly the same’ as what the newer models were capable of; which was to make phone calls. However, smartphone capabilities very quickly opened the gap between the two generations of phones. However, all of this access to the abundance of apps and features is only possible if you buy data bundles. The same goes for business technology. For you to get the full value of your software’s capabilities you need to understand what is needed from an infrastructure point of view. Otherwise, you essentially reduce your proverbial smartphone to an expensive device that only makes phone calls. Fortunately, as the world is moving into the cloud, there is one basic requirement: ensuring you have a sufficiently fast and stable internet connection. This is an easy but significant start to keeping your practice abreast of the next technology curve.
Progression of technology is inevitable. If you avoid the incremental upgrades, you could not only be in for unnecessarily large outlays later on to catch up physically, but you’ll experience indirect costs when you have to pay the cost of catching up. It’s important to plan for this in your budget accordingly. By actively following a savings plan for future upgrades, you reduce the impact to your cash flow if you prepare and budget for these sorts of investments, rather than trying to absorb the expense all in one month’s purchase.