5 Ways to Cut Overhead Without Layoffs

Even with the recession winding down, times - and budgets - are tight. If your practice is strapped and you are considering letting staff go to stay in the black, look first at your nonstaff-related overhead. Staff reductions are hard on office morale and make physicians less efficient. Check out our relatively painless and much less disruptive suggestions for lowering your practice overhead.

1. Shop smarter for supplies: Are you keeping close tabs on your supply costs? Buying bulk office and medical supplies can certainly save you money, so take an organized and forward-looking approach to your stock. Shop around for a better deal, and only buy what you need rather than automatically restocking overflowing supply closets. You may also be able to enter a group purchasing agreement with other practices for volume discounts.

2. Scrutinize service contracts: When was the last time you compared cleaning service rates? What about the other laundry companies in town? Check out the competition for services such as phone and Internet, copier maintenance, and even accounting and bookkeeping. There’s a good chance the rival companies will be willing to negotiate lower rates.

3. Outlaw overtime: The staffer who comes in a few minutes early each day and sticks around late could be costing you big. Overtime costs can add up over the year, especially if you have several employees padding their hours. Set a policy that all overtime must be approved by a supervisor. If the job isn’t getting done in the 40-hour week, you may need to take a look at your practice’s work flow to eliminate the need for overtime.

4. Reduce staff work hours: Rarely a staff favorite, it still beats the heck out of losing one’s job. Even moving from a 40-hour to 35-hour work week can save the practice a bundle, while keeping your work force intact. Consider softening the blow of smaller paychecks by offering employees more flexible scheduling. This also allows you to keep the practice open the same business hours despite the reduction in staff hours.

5. Review facility costs and/or rent out extra space: Are you maximizing your office space? Spend a week or two carefully observing whether there are exam rooms going unused or private physician offices standing empty most of the day. If you find you have space to spare, it may be time to downsize to another location or sublet your unused space to another practice or provider.

Abigail Beckel is managing editor for Physicians Practice. She can be reached at abigail.beckel@cmpmedica.com.

Sara Michael is senior editor for Physicians Practice. She can be reached at sara.michael@cmpmedica.com.

This article originally appeared in the July/August 2010 issue of Physicians Practice.