The back office is often ignored as patient care and increasing revenue is the primary focus for most medical professionals. A metric that sometimes does not get enough attention is profit. The easiest way to increase your profit is to reduce your cost structure, which can be achieved by considering six easy steps:
1) Reduce Merchant Processing Fees/Bank Fees: Make sure you go back to your merchant processors regularly to get better rates.
2) Eliminate Unnecessary Overtime: Process payroll and present monthly financials to ensure that any unnecessary overtime is quickly flagged. Practices that are paying, for instance, $50,000 in overtime should potentially consider hiring another person.
3) Clamp down on Accounting Fees: Make sure the money you are paying to your accounting firm is bringing you measurable value. Will they agree to charge flat fees for services that include unlimited phone calls and emails?
4) Vendor Negotiations: It is important to focus on how much you are paying for medical supplies. Take a weekly inventory and assess invoices to consider renegotiating certain high ticket expenditures.
5) Reduce Expensive Employee Costs: Employee cost is not just salary but also benefits, insurance, and training. By outsourcing your accounting, human resources and compliance to experts, you allow your practice manager to focus on managing the practice.
6) Reduce Exposure: Medical offices are at risk for IRS audits as they are sometimes run as a lifestyle business (Porsche as a business expense), lawsuits from disgruntled employees, HIPPA audits and of course are often the victim of fraud (employee embezzlement). Make sure a CPA checks your financials at least quarterly and ensures that all payroll, hiring, terminations and annual reviews are done correctly and according to current state law. Also consider finding a company that will provide all OSHA/HIPPA training with the ability to put into place strict financial controls to reduce the opportunity for fraud.
Kavita Sahai is the Vice President of Category Development for BackOps. BackOps provides cost reduction and compliance solutions to help medical practices increase their profitability and reduce their paperwork. She is offering clients of the Florida Healthcare Law Firm a free consultation and can be reached at Kavita.Sahai@BackOps.co or by calling 954-871-6544.