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Engineer Efficiency in Your Medical Practice

Eight steps to streamline operations and improve the bottom line.

By Mary F. Krantz, CPA, CHBC, Partner

The business side of health care can be just as challenging as keeping up with the latest procedures and most current medical studies. Costs continue to rise while reimbursements from Medicare and insurance companies are on the decline. Like many businesses during these challenging economic times, professional offices are under increasing pressure to operate their practices as efficiently and effectively as possible while not compromising their high standards of care. To meet the challenge, physicians, dentists, office managers and staff can take various steps to streamline operations and strengthen the bottom line. Here are a few areas to consider: 
  • STAFFING: Personnel and related costs are a significant percentage of the expenses for medical and dental offices. It’s easy to keep adding more and more staff but not adding efficiency with growth. It’s important to regularly review skill sets and office goals to make sure that job descriptions are meeting current needs. Consider realigning duties or modifying work flow as well as evaluating needed skills before adding more staff. 
  • USE EXTENDERS EFFICIENTLY: Leverage physician time better by using midlevel “extenders” such as physician assistants and nurse practitioners to increase productivity. Review work flow to maximize the number of patients extenders see and the duties they and other assistants perform. 
  • USE TECHNOLOGY EFFECTIVELY: Healthcare offices are reliant on technology for billing, scheduling, data management, communications and virtually all aspects of operation.   Is there an integrated technology plan in place to strategically address office needs as cost effectively as possible? This includes incorporating new software and hardware into existing systems, maintenance of existing technology and replacing outdated equipment as well as proper training, back-up and trouble shooting. Each office and staff is unique. Technology should complement work flow and increase productivity. Consider all costs related to technology to identify opportunities to minimize long-term expenses, protect your investment and increase efficiency. 
  • OUTSOURCING & IN-HOUSE CAPABILITIES: Are there services that should be outsourced or, alternatively, are there outsourced services that could be done more effectively by trained staff?   Is marketing being done effectively to build business? Is human resources better handled by contract or employee leasing? Should payroll be outsourced or handled in house? What financial guidance or support is needed that dovetails best with practice operations and oversight? 
  • RENEGOTIATE CONTRACTS: Review contracts and agreements already in place for opportunities to renegotiate better terms or revise policies. Review employee benefit plans and consider options for contributions, deductibles or alternatives. Evaluate the benefits of refinancing existing loan obligations. 
  • IMPROVE PROCESSES: Evaluate operation management. For example, are efficient systems in place for handling supplies and tracking inventory? Is staff scheduling efficient? Is billing being processed quickly?  Does the practice have a collection policy and is it being followed? Are there redundancies or bottlenecks? Are expenses monitored and evaluated? Are internal controls in place for fraud prevention? 
  • EVALUATE SPACE & BUILDING NEEDS: Does office space match needs? Is office space used effectively and efficiently for current work flow, technology and privacy requirements? Would remodeling increase productivity? Is there potential to sublease space? Are there benefits to moving or merging practices for reduced overhead and efficiencies of scale?  
  • PROACTIVE TAX PLANNING: Take a proactive approach to the practice’s tax planning to protect assets and achieve long-term goals. Assure that all tax benefits are being achieved. If the practice or its doctors own the practice’s building, consider a cost segregation study. Consider recent economic stimulus legislation or law changes to identify new opportunities such as ROTH IRA conversions, Section 179 and bonus depreciation deductions and the longer net operating loss carryback period. 
Mary F. Krantz, CPA, CHBC has been a partner at Dennis, Gartland & Niergarth since 1998, after joining the firm in 1986.  Mary oversees the firm’s BizTek department and Professional Offices niche team. She provides audit, tax and operational solutions for professional offices, manufacturing, construction, agriculture, hospitality, government and nonprofit organizations, with additional expertise working with villages and townships. Mary is a member of the American Institute of CPAs, Michigan Association of CPAs, National Society of Certified Healthcare Business Consultants and Michigan Government Finance Officers Association. 


Mary F. Krantz, CPA, CHBC

Mary F. Krantz, CPA, CHBC, Partner