Small shifts that make a big difference in finance 12 month plan to lower your overhead

Because your patients come first.Because your patients come first.Because your patients come first.

Small shifts that make a big difference in financeSmall shifts that make a big difference in finance12 month plan to lower your overhead12 month plan to lower your overhead

Steven A. Adams, Steven A. Adams, CPC, CPC-H, CPC-I, CPC-P, CCS, CCS-P, PCS, FCS, COACPC, CPC-H, CPC-I, CPC-P, CCS, CCS-P, PCS, FCS, COA

Because your patients come first.Because your patients come first.Because your patients come first.Because Your Patients Come FirstBecause Your Patients Come First

So What’s So What’s Wrong?Wrong?


Inman EquationInman EquationInman EquationInman Equation

4 - 5 = -1

It’s not 1’s fault

R - OH = P


What Can You What Can You Do?Do?


Object of the GameObject of the GameAverage practice with a

60% OverheadHas a

5% Increase in RevenueOr a

5% Reduction in Overhead

Results in a

10% Gain in Profit


5 / 10 Rule5 / 10 Rule5 / 10 Rule5 / 10 Rule

2008 2009Revenue 500,000.00$ ## 512,500.00$

OH 300,000.00$ ## 292,125.00$

Profit 200,000.00$ 220,375.00$

A Small Change Makes a Huge A Small Change Makes a Huge DifferenceDifference

A Small Change Makes a Huge A Small Change Makes a Huge DifferenceDifference


Before We BeginBefore We BeginBefore We BeginBefore We Begin

On the financial statement, there are more than 30 lines showing us how we spend our

money. But there’s only one line that focuses on how much we make. Increasing revenue

while decreasing overhead is the key to financial success.


• A/R < 18% > 90 days• Patient Debt < 20% of

A/R• PQRI• E-Rx• EMR bonus• Stimulus Package ’09• Coding Correctly• CCI Edits

• Fee Schedules / Contracts

• Preventive Services G0101 Q0091 G0372 99406 99407 G0102 G0179 G0180

Top Line StuffTop Line StuffTop Line StuffTop Line Stuff


Now Your 12 Now Your 12 Month Plan to Month Plan to

Reduce OHReduce OH


Month 1Month 1Month 1Month 1

Staffing NeedsStaffing Needs


5 Things to Consider5 Things to Consider5 Things to Consider5 Things to Consider

I. Largest expense 23-30%

II. List what you believe to be the problems in the office

III. Can you outsource to save money?

IV. Have staff list top 5 things they do - look for overlaps

V. Look for high paid people doing low pay work

mgma.com



Employee SalariesEmployee Salaries



I. Don’t just count FTE’s consider a budget for staffing

II. Create a grid with positions and create maximum salary

III. Consider raises based on incentives plans for each position

IV. Make your money their money

V. Show employees their entire benefit package annually

salary.com



Health InsuranceHealth Insurance



I. Does everyone at your office need their coverage?

II. Drop the dental and vision and/or charge a percentage of the premium to your employees

III. Consider a high deductible HSA / HRA catastrophic plan

IV. Partially or fully fund the deductible with an “HRA”

V. Watch the person making this decision

ehealthinsurance.com



Retirement PlanRetirement Plan



I. Pay yourself before anyone else – look out for you

II. IRA income limits abolished in 2010 for converting to a Roth IRA but stay for contributing

III. Take your 401K/201K and diversify and reallocate

IV. Invest in an IRA through MAG with a 7% guaranteed growth rate

V. The average doc will need $3,000,000 in retirement to live on 12,000 per month

cbpp.org



Sick Leave and Sick Leave and OvertimeOvertime



I. Average sick is 5 days, average vacation is 10 days

II. Update policy manual to reflect separation pay and unused time

III. Just switch to CAL time 17 work hours for 1 CAL hour

IV. Make your time their time

V. Why are your employees working over time



Lease AgreementsLease Agreements



I. Operating stop provisions

II. Net rentable space and net usable space

III. Is the insurance necessary

IV. Would it be cheaper in the long run to own a building than to rent office space

V. Look at the leases and interest on your equipment – you’re killing me

officefinder.com



Medical, Lab and Medical, Lab and Office SuppliesOffice Supplies



I. Make a budget and stick to it – Tie it into a staff bonus – Make your money their money

II. Consider ILS through MAGIII. Have one person

responsible for suppliesIV. If pass through billing for

labs check the billsV. Requisitions forms work

and should be reconciled by you

magmutual.com



Outside ServicesOutside Services


5 Things to Consider5 Things to Consider5 Things to Consider5 Things to ConsiderI. Usually overlookedII. Outside services CAN save

you money and help ensure compliance:

I. (coding and documentation, payroll, bookkeeping, billing, collections, budgeting, yard, janitorial, hardware, software, HR management)

III. Inquire about free services available from vendors, IPA, Malpractice

IV. You’re paying for advice, so listen

V. Always ask for a [email protected]

m



Postage and Postage and Telephone CallsTelephone Calls



I. Stop sending indefinite statements

II. Use a system like MD Messages to confirm patient appointments and for lab results

III. Look at having statements done off-site by your billing vendor

IV. Look at stamps.com instead of a meter

V. Put in a 900 line for rx refills mdmessages.co

m



AdvertisingAdvertising



I. How did your patient find you in the first place?

II. Satisfaction survey helps show you what works

III. Did the color add in the yellow pages work?

IV. Are you on the web?

V. Its always cheaper to keep an existing patient than to find a new one. Marketing never stops

masseyeandear.org



Patient RefundsPatient Refunds



I. Refunds are not a good thing

II. Patient refunds should be researched to find out what went wrong?

III. Refunds to governmental and private payers must be made immediately

IV. Make sure you find out why a plan requested money back

V. Take corrective action – keep that cash magmutual.com


Month 12Month 12Month 12Month 12Petty Cash, Bank Petty Cash, Bank

Charges and Other Charges and Other Things That Cost Things That Cost

You MoneyYou Money



I. Make sure all petty cash is accounted for with receipts

II. Make sure you only have one receipt book at the front desk

III. Call the bank and ask if there is another option for your primary account based on your activity

IV. If you use a credit card do you have one with points that can be used for future purchases

V. Call your mobile carrier and find a way to reduce costs

magmutual.com


Remember…Remember…


Object of the GameObject of the GameAverage practice with a

60% OverheadHas a

5% Increase in RevenueOr a

5% Reduction in Overhead

Results in a

10% Gain in Profit


Any Questions

Office: 888.624.6474

Direct: 770.241.4344

E-Fax: 404-848-8661

E-mail: [email protected]

Facebook: facebook.com/people/Steven-Adams/1154124331

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Small shifts that make a big difference in finance 12 month plan to lower your overhead