TOWN HALL #6:
MANAGING EXPENSES:
Questions posed by members are followed by a selection of responses.
We are a hospital–based program and have a hefty overhead rate attached to our expenses. We make a profit if you look at our program as a pure profit/loss center but show a loss once we factor in overhead. What can we do?
- Establish a mechanism to always review two sets of numbers: those including overhead and those excluding overhead.
- Dichotomize and analyze operational vs. non-operational expenses. Drill into the profit margin for each individual service.
We are burdened by huge physician salaries. Our physicians have been on board a long time. During a time of declining business, these salary levels seem unsustainable.
- Associate financial incentives with desired behaviors. Include productivity (e.g., patients per hour), outcomes, and bedside manner as measured by patient satisfaction surveys.
- Compare physician salaries to industry and regional benchmarks both pre-hire and ongoing.
- Integrate physician assistants (PA) and nurse practitioners (NP) in creative ways, including double coverage; these specialties often offer strong occupational medicine skills.
As the manager of our occupational health program, I am tasked with always looking at ways to grow our revenue and reduce our expenses. How can I get my staff more involved in these efforts so I’m not always the bad guy?
- Note caveats and don’t overreact: use a scalpel, not a meat cleaver to reduce expenses.
- Be transparent: staff from top to bottom should be aware of what is going on and where soft spots are.
- Set goals and solicit ideas to hear from all staff; you often get the best ideas from those you least expect to hear from.
- Share the requisite break-even number of patient visits per day then monitor them daily and place numbers up in the clinic (e.g., daily goal vs. census) where they can be viewed
- Complete a quarterly review of contracted services, including lab, meds, and office supplies. Negotiate on volume and resist periodic price Increases.
As with most programs, our biggest expenses are salaries. How can we be sure we are staffed at the appropriate levels?
- Develop a mechanism to measure productivity on an ongoing basis.
- The R.N. model is no longer necessarily true; use Medical Assistants supported by R.N. coaching.
- Know and follow the practice requirements of each staff type.
- Be innovative in how you use your mix of staff.
What does everyone think about the old concept of “loss leaders?”
- Seldom, if ever, provide a service that costs more than you charge.
- Consider some wiggle room: there may be opportunities to make it worth doing, e.g., free educational programs at the workplace. It does involve uncompensated staff time but over time can bring in incremental business.
- You need to know the unit cost of each service.
Someone out there must have a few unique ideas on how to lower expenses. Let’s hear them!
- Join a local, regional, or national purchasing co-op for office supplies.
- Be certain that the right staff offers the right service at the lowest cost and follows best practice standards.
- Match staff with task (e.g., minimize having an R.N. send faxes or walk people back to exam rooms).
- Consider agency staff for fill-in as needed, or have backup staff available without relying on full-time staff.
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