Physiatry Practice Management Resources

With managed care whittling away revenues, it’s no wonder doctors are looking closer at expenses. More than ever, your take-home pay depends on keeping practice costs down.
The largest single overhead expense for most practices is employee salaries, accounting for one-quarter or more of costs. That makes staff a juicy cost-cutting target.

“With practice revenues stagnant or declining and staff costs going up, employee salaries rise as a percentage of practice revenues,” explains Robert B. Connelly, a principal with The Health Care Group, a medical practice management firm located in Plymouth Meeting, Pa. “Under those circumstances, it’s only natural to ask, ‘Is my practice overstaffed?’”

But before you whip out the pink slips, take a careful look at your practice staffing patterns and expenses. You may indeed find that you are overstaffed due to accumulation of excess employees through mergers, or the failure to let go of workers who started out as temps.

But you are just as likely to find that other factors, such as excessive overtime and excessive compensation levels, are driving up your staff costs. An operational audit might even reveal that your practice could benefit from adding staff — if those extra workers will allow you and your fellow doctors to see more patients or otherwise bring in additional revenue.

“The percentage of revenues going to overhead or staff salaries are only rough indicators that you may have a staffing or operational problem,” Connelly says. “You need to examine your practice and take into consideration your unique circumstances before concluding that it’s time to let staff go.”

Tell-Tale Signs of Staffing Trouble

Nonetheless, there are some red flags that may indicate you have a staffing problem. “Rely first on your instincts and intellect,” Connelly says. He recommends asking the following questions:

Has your practice experienced major changes recently? Have you merged, bought a practice, sold your practice to a network, or joined a health care system? Staff functions, such as supervising billing clerks, may be duplicated in these situations.

Is your office cramped? If you have gradually added personnel without a business plan or a growth strategy, you may now have more people than you need.

Have you added new physicians or new employees? If so, do you now have some people working at a frantic pace while others slack off? Are there employees sitting around drinking coffee and chatting or trying their best to look busy when they actually are not?

If the answer to any of these questions is “yes,” your first step should be to review job descriptions with an eye toward reorganizing staff, Connelly says. Is every employee doing something that needs to be done? If not, restructure the jobs your employees are doing so that all meaningful tasks — and only meaningful tasks — are being performed.
Beyond instinctive measures, look to national and regional benchmarks for staffing levels, Connelly says. Such benchmarks are available from consulting groups, such as The Health Care Group, and trade organizations, including the American Medical Association and the Medical Group Management Association. They can give you a good idea of how many support staff and of what kind you should have for each physician.

Keep in mind, though, that making a staffing decision based on a benchmark may not be appropriate in your case, Connelly says. A practice with 20 physicians in one location may require only 60 support staff, while a practice with 20 physicians in a dozen locations may require 160. Likewise, practices with high proportions of managed care may require more and different staff to handle patient preparation, in-house ancillary services, and claims processing and referrals.

Benchmark data on staffing compensation and overtime use can help identify other staff cost issues. But even if you do find you pay your staff more in overtime or straight salary, it’s often because they have been with you for years, Connelly notes. Laying them off could come back to haunt you in the form of diminished patient loyalty, decreased staff loyalty, or even a lawsuit for age discrimination or wrongful discharge.

“Every practice and every physician is unique,” Connelly says. “Your staffing needs are yours alone and you need to develop solutions that work for you.”