How to cut costs without cutting staff

September 15, 2009

The recession has affected medical practices, causing many to look at how money is spent. This five-partner practice cuts expenses creatively by not overlooking small details and has been able to prevent employee layoffs.

Key Points

"There can be economy only where there is efficiency."-Benjamin Disraeli (1804–1881), British politician and author

We all know that the economic downturn has affected medical practices; patient visits are down and luxury spending on items such as cosmetic treatments and refractive surgery has slowed to a trickle. So it is only natural that, as we try to weather the storm and deliver the same quality health care that we do in "prosperous" times, we take a good hard look at how we spend our hard-earned money in the practice.

Recently, this author had an opportunity to sit down with Tracey Rana, practice administrator at Eyecare Associates, Bethpage, NY, and talk with her about how she is addressing this challenging economy in a five-physician group. Specifically, we discussed the economy's impact on the practice and her "creative" approach to cutting expenses.

A So far, the economy has not had a direct impact on our practice, as expected. It did, however, impact our on-site optical. Deposits were down for the first quarter. Patients now are considering glasses as "luxury" items. Fortunately, patient visits have not decreased. An increasing number of patients now question their co-pays and refraction fee, however, delaying the check-out process. Our no-show rate has increased by approximately 0.5%. I am not quite sure whether there is a direct correlation between the economy and our no-show statistics. Revenue does not appear to have noticeably declined. However, costs, such as operating expenses, are forever on the upswing. This situation, in turn produces uneven finances.

Q Were the ophthalmologists concerned about the trends and potential financial affect on the practice? What were some of their specific concerns, and how did they want you to address them?

A The MD partners were extremely concerned with the uncertain economy and its potential financial effect on the practice. Each month, a few days before our monthly MD meeting, I have been asked to place "cost-cutting measures" on the agenda. My initial thought was, "Oh no, here we go again! Not only am I expected to be the practice administrator, wearer of many hats, but I also am expected to be a 'miracle worker.' "

Increasing overhead was one of everyone's most specific concerns, followed closely by declining reimbursements and impending "supposed" Medicare cuts. I was advised and expected to review all cost-cutting avenues and provide solutions for every area, if possible, for the year. All this had to be done in a manner that did not affect employee morale. The headache began.

Q I presume that, from your perspective, there was some ability to cut costs, but you really wanted to stay away from having to cut any staff, if at all possible.

A The last thing I wanted to do was to start eliminating employees. This truly was an area that I had hoped to leave alone. By cross-training the majority of the employees, creating flexible schedules, and implementing (unfortunately) 2009 salary freezes, I have been able to avoid employee layoffs.