LAS VEGAS — Physician office overhead costs are up 15%; reimbursements and collections are down. To say the least, 2009 hasn't been a boom year for pediatricians.
But don't despair.
There are ways to save money and tilt your balance sheet back in the direction of a healthy bottom line, said Dr. Norman “Chip” Harbaugh, a primary care pediatrician and practice management specialist from Atlanta.
Here are some cost-saving tips from his talks at a seminar on practical pediatrics sponsored by the American Academy of Pediatrics:
▸ Maximize tax-free benefits for you and your partner(s). Don't forget to deduct payments for malpractice, major medical, disability, life, and liability insurance. Personal expense account charges are deductible as well, including the cost of attending CME meetings; dues and subscriptions; and up to $45,000 a year for retirement spending. Younger physicians may also want to self-fund their own buyouts over the long term by purchasing variable adjustable life insurance policies.
▸ Stretch your office services with mid-level providers. Salaries for nurse practitioners and physician assistants can quickly reach the “breakeven” point and begin increasing the profits of the practice once they perform 10-13 checkups a day. Such providers also can coordinate hugely popular “quick visit” clinics, such as a sore-throat/earache walk-in clinic each weekday morning from 8 a.m. to 10 a.m.
▸ Reevaluate your ratio of front office to clinical personnel. A “good” ratio is 1 front office person to 3.5 clinical staff. “Better” is 1:3.4 if your office has a lab and 1:3.2 if your office has no lab. A ratio that's “too low” is 1:2.8 or 1:2.3, said Dr. Harbaugh.
▸ Charge patients for simple but time-consuming tasks. For example, consider charging a fee for filling out forms for camp.
▸ Save on supplies. Become part of a Physician Buying Group (PBG) for office supplies, medical supplies, and lab supplies, and especially, vaccines. Such groups have the potential for saving a practice 10%-25% on “big ticket” items and thousands of dollars a year on vaccines. Three PBGs are the National Discount Vaccine Alliance, 785-273-4165, http://nationaldiscountvaccinealliance.comwww.atlantichealthpartners.comwww.physall.com
▸ Renegotiate your rent. “Commercial real estate? They're hurting,” said Dr. Harbaugh. He suggested that any physician or group whose lease is expiring within 2 years should “renegotiate now.” Some landlords are offering 3-6 months of free rent in exchange for a renewal of an office space lease. Another option, especially in light of the dismal commercial real estate market, is to consider buying your own building while prices are low.
▸ Stretch the use of your office space. Could you accommodate another provider and expand your business hours from early morning to late evening, with physicians staggering their hours? Could you sublease space during off-hours to a lactation consultant; physical, occupational, or speech therapist; or registered dietitian who could provide nutrition counseling and diabetes education?
▸ Target missed appointments. Automated dialing systems can be set to make reminder calls and reduce expensive no-shows, if this is a problem in your practice.
▸ Cede out-of-office care. Dr. Harbaugh admitted that this idea could “run me out of town,” but he suggested that practices tally up the cost of delivery/newborn hospital visits, pediatric hospital rounds, and courtesy emergency department visits. The office, he said, “is where we provide the most service. It's our cost center.” Some practices may want to poll families to see whether they would be willing to trade a visit to the hospital to see their newborn for an expanded level of office care, including early morning and evening walk-in visits.
▸ Consider participating in clinical trials. “It's a lot of work,” but adding research to a pediatric practice can be rewarding and intellectually invigorating, as well as profitable, infusing up to $100,000 a year into a practice's bottom line. The concept works only as long as a dedicated physician wants to take on the role of principal investigator and at least one office staff member can devote the bulk of his or her time to coordinating the trial(s).
Disclosures: Dr. Harbaugh disclosed that he is on the national advisory boards, is on the speakers bureaus, and/or serves as a consultant for several pharmaceutical companies. He recently served as CEO and chairman of the board for Kids First Pediatric Alliance, a metropolitan Atlanta IPA.