Wednesday, September 12, 2007

Cost Containment: Here's some tricks

With declining reimbursements, the only way to to remain viable is through revenue generation coupled with cost containment. I'd like to talk a bit about costs, and some obvious--and not-so-obvious-ways to minimize them.

Fixed Costs: These are items like rent and insurance. While you probably have little negotiating power in this area, with regard to rent you can keep costs down the following ways:

  • Maximize productive use of space. I pay $26 per square foot, and use all of it productively. An EMR helps here, because I don't need to dedicate several hundred square feet to chart storage. Also, mobile units, such as portable sonogram machines, client computers, and portable lab equipment, also helps. And of course, I have VPN, because it essentially converts my house or Starbucks, or anywhere with an internet connection into an extension of the office.
  • Maximize revenue generation areas of the office. These areas include exam rooms, your office, and the lab. Back office functions, such as insurance claims submissions and billing work, can be virtual, via your VPN, yet remain "in-house" as opposed to being outsourced. With a well networked office, exam rooms can serve as exit offices while you go to the patient in the adjacent room.
  • On-demand Supply Ordering and Smart Storage: Closets = Square footage = $$. With some thought and planning, shelving, exam tables, cabinets, and closet space can be used for maximal storage at minimal square foot usage. In addition, I order supplies as needed, since my vendor, PSS Worldwide Medical, always delivers next day.

Variable costs: These include costs for items such as medical supplies, payroll, utilities, stamps, etc, and can be determined by examining the profit-loss statements prepared by the accountant. here are some ways to keep variable costs down.

  • On-demand supply ordering. DELL Computers uses this concept. I do as well, just make sure you don't run out of Foley drainage bags after you've already placed the Foley.
  • Part-time employees: Simple. They cost less than full time employees, plus no overtime.
  • On-demand staffing: I staff heaviest on the busiest days. Plus, since I am capable and willing to pick-up slack on days that we are inadvertently short staffed, this method works out well. Busy days or light days, open or closed, phones are always!!! staffed.
  • Amortization of utility payouts. Most utility companies will estimate a fixed monthly cost for you to pay based on a prior years consumption. I like it for cash-flow management.
  • Have your phones (VOIP), cellphones, & internet on fixed plans, so that costs do not soar with usage. Get the maximum minutes for cell phones, since the incremental costs of the plan are much less than overage payments. VOIP is cheap, plus never varies with usage. On the balance, I've been happy with it, yes, even for the "mission critical" functions. I'm talking to you, Sunrise.
  • Fax. Why snail mail when you can fax the referral letter. Not only is it faster, more efficient, and trackable, it is cheaper. I love my fax. Yeh, yeh, yeh, I know, HIPAA. But it can be done and still be in compliance

Direct costs: These are costs that are directly involved in patient care. Here's how to minimize these costs.

  • Everyone does everything. MA's do data entry, answer phones, clean rooms etc. The docs answer phones (if they are not seeing patients) when needed, clean rooms, order supplies, schedule patients, e-file labs. Again, an EMR and a VPN helps here as well.
  • Part time employees and on-demand staffing: see above.
  • Creative patient scheduling: Figure out which works best for you; clinic, open access, proportional, or wave scheduling, and then determine minimal staff requirements for your office hours.
  • Ergonomic room design. I have rigged my rooms so that I can do a many procedures without an assistant present. I learned these skills as a surgery resident in central line clinic. In fact, I can prep with my left hand, place the scope with my right hand, and simultameously do a UA with my toes (kidding!). If you have 2 hands, a brain, and a Mayo Stand, you can make it work as well, and in the mean time, you'll free up staff to answer phones and book new patients or enter claims.
  • Training and process management: Training employees well and developing efficient processes of doing business will allow you and your employees to work smarter and with less mistakes and to get the job done right the first time. This simply saves money.

Indirect costs: These costs cover non-patient care activities, such as back-office staff and billers. Here's how to minimize these costs.

  • See direct costs.
  • VPN
  • EMR
  • Embrace technology
  • Multi-task
  • See training and process management

Hope you enjoyed the post and thanks for listening. And Seaspray, thanks for the baby card. Unexpected and appreciated.

The IU.