Owning and operating a medical practice is one of the most complicated and complex businesses to run. The challenges are partially due to the rising overhead costs that have increased in the last 15 years.

The top 5 business costs for healthcare practices are:

1. Support staff salary and benefits
2. Medical/Surgical supplies
3. Facility expenses
4. Technology (EHR, billing systems, servers, telecommunications)
5. Clinical laboratory

Increased Overhead

The increase in overhead over the last 15 years is that insurance has spiked 200%, and reimbursement has decreased. Due to growing demand and competitive rates, technology has become much more expensive. Doctors must complete more paperwork and documentation because of malpractice concerns. Billing using third-party payers has become much more complicated. All of this time-intensive work has caused physicians to hire more support staff.

Overhead for healthcare practices has risen to almost 60% forcing physicians to take a dramatic pay cut. Most physicians who own their practice or manage a clinic never received “business management” training in medical school and benefit from growth management firms’ assistance. Growing a medical practice is the only viable way to increase profits and create stability and longevity.

Assessing Overhead Costs Within a Practice

Before knowing how to decrease healthcare practice expenses, it is essential to know the exact overhead at which your practice is operating. This may include the help of your accountant or a management team.

This equation can help give your team a better understanding of your overhead, costs, and what can decrease those costs:

Revenue * 0.60 = benchmark overhead

Total operating expenses (minus provider salaries and benefits)/total collections = actual overhead

Once you have an idea of your actual overhead, it’s time to create an action plan to reduce overhead costs. While it may not seem like it’s reducing costs, many practices find that after evaluating practice performs and identifying areas where the bottom line can be improved, hiring a growth management company can be beneficial.

Know that it may be impossible to cut down costs in all areas of your business. But an evaluation that assesses policies, supplies, and staffing costs can help identify where there is room for improvement.

How to Reduce Overhead Costs

A common concern when looking at reducing costs is jeopardizing the level of patient care your practice provides. Here are a few approaches to lowering costs while maintaining a high level of patient-focused care:

Adopting Technology

The goal is to work smarter, not harder. This will avoid burnout and rising costs, which impacts everyone in a practice. Using selective technology like scheduling software, predictive analytics tools, and call center technology automatically takes specific administrative tasks and automates them. Scheduling software can make adjustments to the staff’s schedules while helping reduce payroll and overtime costs.

Artificial intelligence (AI) software helps complete paperwork, import test results, and provide prescription reminders. This takes manual paperwork out of the physician’s hands, leaving them more time to spend with patients and providing quality care. It can also help avoid excessive testing or appointments by sending automated prescription reminders, appointment reminders, and follow-up notes from appointments.

General administrative tasks can all be automated and digitized for practice efficiency.

Target the Right Patients

Utilize digital marketing strategies to target your patients online. Patients have an overabundance of information readily available at their fingertips, and over 80% of patients look online for a doctor before booking an appointment. Getting your practice in front of patients online using targeted ads has a more significant impact than ever. Effective digital ads can cost significantly less per new patient than traditional marketing.

Telehealth

Virtual appointments cut down on the facility costs and staffing costs at your practice. Telehealth provides patients with an added level of comfortability since patients can take appointments from their own homes. Telehealth, rising in popularity due to COVID-19, has low upfront fees. Along with seeing patients in a timely fashion, physicians can see more patients in a day than if they were all in-office appointments.

Another benefit of telehealth is that it minimizes the need for in-person follow-up appointments, freeing up time for new patients or patients who need to have in-office visits. Patients are satisfied with the care they receive from telemedicine calls, and it allows physicians to be more intentional and efficient with their time and resources.