By focusing on productivity and performance, healthcare providers can effectively manage their practices' costs, according to HealthCareBusiness.
Here are seven things to know:
1. Medical practices should know their fixed costs, direct costs and variable costs.
2. Direct costs include medical equipment expenses and staffing costs.
3. Employee salaries, alone, will eat up as much as 25 percent of a practice's revenues. Ensure you are employing an appropriate number of staff members. Additionally, make sure employees perform tasks that allow them to perform to the full extent of their licenses.
4. Fixed costs include utilities, office rent and malpractice insurance. Most of these costs are part of long-term agreements, so negotiate lower rates during contract negotiations and renewals.
5. It may be more lucrative to buy supplies on a short-term timeline, instead of in bulk, because practices may end up with excess inventory.
6. Understand your practice's key performance indicators, and track them, well:
• Profitability indicators
• Revenue cycle indicators
• Cost indicators
• Liquidity indicators
• Productivity indicators
7. Develop a workflow analysis to understand all processes occurring within your practice, and who performs each process. This allows a practice to pinpoint and correct inefficiencies.