How to Save Money on Overhead Expenses

Although death and taxes seem certain in life, another certainty is that prices always go up. Managing this increase in cost can be difficult for some rheumatology practices. But Chris Morris, MD, rheumatologist, Arthritis Associates, Kingsport, Tenn., and Herbert S.B. Baraf, MD, FACP, MACR, managing partner, Arthritis & Rheumatism Associates, and clinical professor of medicine, George Washington University, Washington, D.C., have actually found some ways to lower expenses at their practices. Here’s a look at some specific areas and strategies.

Employee Expenses
The time and money devoted to hiring and training are among the most expensive aspects related to employees. To save money on this expense, Dr. Baraf recommends hiring slow and firing fast. “In other words, take your time to find good people,” he says. “Each time you have to rehire a position, it involves training, fees, time and resources. On the other hand, a bad hire should be recognized as quickly as possible and terminated.”

“Retaining staff will save you a lot money,” Dr. Morris adds. He’s also a proponent of cross-training. “No one should be so specialized that they cannot do other tasks. Think twice before outsourcing a position—which can end up being more expensive.”

Regarding health insurance, when purchasing or renewing policies a practice can lower its premium costs by increasing deductibles and coinsurance amounts, maximum out-of-pocket limits and copays for services for prescription drugs. “Although this lowers the cost of the policy to the practice, such adjustments will increase out-of-pocket costs to the policy holders, i.e., physicians and staff members. Keep in mind there is a trade-off to doing this—by reducing benefits staff is disadvantaged and loyalty suffers,” Dr. Baraf cautions.

Office Space
Owners of independent private rheumatology practices should strive to own their office space rather than rent it. “Your monthly payments will go toward building equity, rather than paying rent [that goes to] someone else,” Dr. Morris says. “Rheumatologists’ offices do not need to be located next to a hospital. Look for a location that is convenient in terms of accessibility, parking for patients and staff, and other amenities.”

Dr. Baraf adds, “Purchasing your own office and paying rent to yourself can provide a great benefit if you’re a solo practitioner.”

However, if you add partners, owning your office space may not work as well.

For growing practices that decide to rent, Dr. Baraf recommends getting a space that allows room for expansion, because moving and renovating are expensive.

“Work with a real estate agent to help you negotiate a better deal, such as rent abatement [not having to pay rent for a month or several months at the start of a lease] or an agreement to provide renovations after a certain time period,” Dr Baraf says. “When your lease is coming up for renewal, let your landlord know that you’re shopping around, which may entice [them] to provide a lower rent increase, [because] finding a new tenant for a medical space can be difficult.”

Equipment & Supplies
Dr. Morris says to comparison shop for furniture. “We opt for function and comfort, rather than trying to make a fashion statement,” he says. “Similarly, walls are decorated with inexpensive prints, rather than expensive artwork.”

Don’t be afraid to haggle and bargain. Manufacturers may be willing to cut the price of heavy equipment to move it, Dr. Morris continues. The sale of a unit at a discount is better for their bottom line than no sale at all.

Additionally, if your practice works with a group-purchasing organization, you may be able to get a discount on an electronic health records system. “Do your research to find the right vendor and equipment,” Dr. Baraf says. “Get input from colleagues who have worked with different vendors to make sure they offer good service and that there aren’t any hidden costs. If your system is down for even a day, it will be costly.”

Dr. Baraf recommends using a group-purchasing organization to get group discounts that many can’t get alone.

For office supplies, again, comparison shop. Don’t automatically use the same company time and time again, Dr. Morris says. If you know the practice will use all items in a reasonable timeframe, buy in bulk—which usually costs less. Shopping at warehouse savings clubs may help reduce expenses for office supplies.

Invest in Promotion & Marketing
In an effort to get your name better recognized in the community, Dr. Morris advises looking into serving as an expert for a news article. Practice owners can also nominate a partner to be recognized in an article on community movers and shakers run by a local publication. Another idea is to support local sports programs with an ad—it’s inexpensive, but shows community support.

Dr. Baraf recommends investing in a professionally designed website that is search engine optimized, which enables potential patients to find it. Another method he’s found success in is to print small cards with a QR code on them that take patients to social media outlets where they can leave positive comments or reviews about his practice. “Usually, only disgruntled patients will take the time to leave feedback,” he says. “But this [approach] helps satisfied patients quickly and easily find you on social media.” It won’t cost you much, just the printing cost of the cards.

Outside Services
When hiring professional services outside the practice, make sure you use someone who understands healthcare issues. Accountants who deal with physician practices can be invaluable, Dr. Morris says. It may also pay off to occasionally have an outside consultant examine your practice and recommend beneficial changes.

The bottom line: Purchase wisely, but don’t pinch pennies. Dr. Baraf concludes, “Buy cheap; buy twice—as the adage goes. Don’t be afraid to spend money on something if it will bring a return and, ultimately, add to your efficiency. An upfront investment [may] not bring a return until after you have it in place.”

Karen Appold is a medical writer in Pennsylvania.