Board Forum: Managing Overhead

What recent change(s) have had the most positive impact on your practice’s bottom line?

Steven Pearlman, MD: Over the past two years we have streamlined our inventory tracking. We did this by integrating inventory into our EMR. Many EMRs offer a number of extremely helpful features that we did not take full advantage of until recently, including financial benchmarks and staff utilization.

Gregory Buford, MD: Over the last several years, I have encouraged my staff to actively look for any waste, redundancy, etc. that potentially has an impact on our bottom line. My staff have taken this as a challenge and have actively run with it. Like others, we have found a tremendous amount of waste in our procedural kits and so have effectively trimmed down. You would be surprised how little you really need for an injectable procedure when supplies are limited

Joel Schlessinger, MD: When COVID started in 2020, I started looking at every bill for our clinic. The results were pretty surprising, as we had been paying more for many things than we should have. For example, mowing was being done weekly, but it was easily spread out to every 10-14 days depending on the time of year. Additionally, we put bark replenishment on hold and now only do it as needed. This alone saved us about $400 a year! We had our staff do the garden pots outside our doors and they turned out as good, if not better, than our usual people we used.

Waste removal was inefficient, and we often had overages due to the size of the container we were using. Simply going up one size on the trash bin allowed us to have fewer pickups and saved us about $40 a month annualized, despite the slightly higher charge for the larger container.

We do window cleaning just once every year or two now.

The phone bill has always been a tough item, as charges just seem to sneak into it. We try to go over this monthly or at least every few months, and we have found literally thousands of dollars of inappropriate spend on it. Investigate any unlcear charge, which could be fraudulent. Sadly, we have found charges that are clearly fraudulent and the phone company will only refund these charges for a few months, even if they were absolutely not correct.

We have a few credit cards that are used by staffers. We scrutinized these cards and found a few spends that were not necessary.

Jeanine Downie, MD: I practice in an 1870 Victorian that is very energy efficient because I had to replace 72 windows when I bought it 18 years ago. However, when there are no patient hours, we are very focused on decreasing the heat to 61° during the winter so not too much heat is wasted in the building and increasing the temperature to 76° in the office during the summer so not too much air conditioning is wasted. This alone has saved us significantly on our energy bills.

I completely agree with issues of putting too many supplies on the procedure trays. We are decreasing the amount of supplies we put on the trays, even wet paper towels for wiping off from laser procedures, etc.

We have changed/improved vendors that were more reasonable in pricing and negotiated other vendors in their pricing that we have been with for years. This includes negotiating with the people that provide our patient gowns, questioning snow removal and leaf removal bills, negotiating with our waste removal vendors, and negotiating with our computer/cybersecurity company.

Susan Weinkle, MD: My overhead is low, in the range of 27-30 percent, because I have made a point to monitor practice operation. One thing I do is review overtime every two weeks. I have a wonderful employee who consistently works overtime, but I know she is working and that her work quality is strong. Conversely, I had an employee who was clocking in an hour before everyone else on a daily basis—basically getting paid an extra five hours a week to drink coffee and await the arrival of her coworkers. I had a talk with her and put an end to it.

In addition to waste associated with Botox left in the vial, I discovered I was wasting up to two to three units per syringe because of the syringe design. I switched to a TB syringe with a 31-gauge needle, which cuts down on this waste and is more comfortable and less intimidating for patients.

What investment(s) have had the most positive impact on your practice’s bottom line?

Dr. Weinkle: Eliminating no-shows is so important. The potential revenue lost from a patient who doesn’t come in for a 45-minute procedure is significant. We have invested in an excellent reminder system that sends a text to patients one week before and one day before their appointment. Patients are asked to text back or call the office if they need to reschedule, allowing us to ensure our schedule is full. It has cut down on no-shows significantly.

Randolph Waldman, MD: I am reminded of the importance of having an in-house CFO or bookkeeper who makes certain that an alarm sounds for any new charges from a vendor we have not ever been billed by before. It is important to have someone scrutinize and reconcile every invoice with the person in your office who orders this item(s). We all get invoices from fake organizations or societies and unsolicited but massively overcharged printer cartridges, gloves, and other supplies.

Steve Yoelin, MD: Do whatever you can to hire and retain exceptional people, since they are arguably our most valuable assets. Treat them very well by considering bonuses, daily lunches, complementary treatments, etc.

The best form of advertising is word of mouth, which is also free; maximize it by offering exceptional service.

Dr. Buford: During COVID, I made the leap and bought an office building. I gutted it, built it out exactly how I wanted it, and have never looked back.

In addition to the obvious financial rewards associated with owning your own building, there is a tremendous amount of pride associated with knowing that I chose the look and feel of the space and that I ultimately own it.

Dr. Downie: We have made a lot of capital improvements to the outside and inside of the building and keeping everything looking fresh and appropriate. We have a great handyman/contractor who works independently, saves us money, and has our best interests at heart. Have a good relationship with your vendors and tech support people that service your practice—it is absolutely critical.

One of the best investments that I have made in the past two years has been my purchase of the LaseMD by Lutronic. The LaseMD has two different modalities. The first addresses fine lines, precancerous lesions, lentigines, and hyperpigmentation on the face. The second is the Keralase hair laser, which actually grows hair along with the Kerafactor serum. These two components of this laser make it very popular in my practice, and people who are not using it for their hair are using it for their faces and some are using it for both.

Dr. Pearlman: I hired a new office manager. Sometimes you need to spend more money for a more experienced individual. This immediately took a lot of the burden off me for all the non-clinical organization, HR, and day-to-day function of my practice. She is a lot more available than I am to employees and finally took a lot of those responsibilities off my plate.

What are some of the biggest sources of waste you see in practices?

Dr. Downie: In addition to negotiating with vendors, think about theft. If you have cameras, take the time to occasionally review them! If you do not, install them to avoid significant theft/waste in practice.

I personally check each line item of my business American Express bill every month. We have found some recurrent charges that should not have been there by different vendors that we have fired over the years and occasionally there is a fraudulent purchase.

Dr. Buford: One of the biggest sources of waste within our space is inefficient marketing. We closely track all marketing spend and find that social media (when used correctly) is by far the most efficient way to spend a dollar.

Dr. Pearlman: The biggest waste is buying a laser or device to “stimulate” a new service or beef up a procedure that you would like to do, unless it directly fits into your patient profile or you have a solid way of bringing in new patients. Devices should complement what you do. Do not buy into ROI projections that are part of many sales pitches.

Dr. Schlessinger: Advertising was out of control. Over the years, certain publications had asked us for ads and we obliged, only to find out that these added up to about $2,000 a month in extra ad spends that weren’t pulling in new patients. We also stopped some TV advertising and beefed up our spend on Google ads, which was more successful. We quit all but one billboard.

Have you identified any “hacks” to reduce costs in your practice?

Jason Pozner, MD: Key is a good financial person who watches your back and someone to watch them. Things need to be looked at at regular intervals as they tend to creep up over time—insurance, payroll, supplies, cell phones, IT, coffee, supplies, etc.—we evaluate all on a regular basis and adjust.

Dr. Buford: I am a huge fan of recycling used paper. I take copious notes during the day and would pay to buy notepads. Instead, I re-use paper from the copier, etc. It really does save in the long run.

Dr. Downie: I have my office manager clean my office building, and I pay her separately for this. Unfortunately, a lot of the medical cleaning crews from my area are not exactly honest; I cannot be bothered having to count everything the minute after the cleaners leave!

Dr. Niamtu: Almost all practice use steam autoclaves to sterilize instruments. Many items cannot be subjected to heat. I have used a gas sterilizer for decades. It works by using ethylene oxide, and we run it overnight. You can literally sterilize almost any item using a gas sterilizer. This has allowed us to reuse products that are not grossly or obviously contaminated. Having the ability to sterilize items that would be heat sensitive and therefore discarded is a savings.

Dr. Yoelin: Consider shopping at big-box stores like Target or wholesale clubs like Costco for both non-medical and medical products, which are sometimes priced more cheaply than at traditional medical supply distributors. Closely monitor assets, such as cash and inventory, to minimize misplacement, spoilage, or theft since these types of assets are very valuable in this industry.

Dr. Weinkle: Using GPOs can save money on supplies and consumables, but you still need to monitor prices, as many vendors will gradually increase them over time. Prices can fluctuate, especially in today’s economy, and they are variable. The cost of a box of gloves may differ by $10 from one vendor to another. All of this can add up. Track expenses and check your invoices with prices listed, not just packing slips!

Because some products and supplies have been hard to acquire consider stocking up on certain essentials. But monitor expiration dates at the time of purchase and delivery. Don’t order a quantity you won’t be able to use before it expires. Properly rotate inventory to ensure products with the nearest expiration dates are used first.

Consider Shrinkage

All businesses lose profit from various factors. A convenience store that loses Pepsi from overflow of the cup at the self-serve fountain or loses money from shoplifting refers to these losses as “shrinkage.” Many doctors don’t take the time to pay attention to “medical shrinkage.”

I and my nurse injectors use a lot of tray set ups for injectable procedures. Over a year, we were wasting a lot of consumables. We polled everyone and figured out (as expected) that people who set up the trays simply threw on a handful of materials without thought. We decided on “what is truly required” for an adequate tray set up. We stopped using alcohol pad packets and switched to alcohol dispensers that pump alcohol onto a small cotton ball. It’s easier, faster, and less expensive. These small changes could result in several thousand dollars of savings per year—and this a moderate part of my practice.

This actually excited the staff to look further. Our facelift and eyelid trays were also victims of overuse of materials. It is more cost effective to put more on the tray as you need it as opposed to discarding at the end.

I have collected all my Botox vials for 25 years and have “Botox Art” in my office. About eight years ago I performed an observational study (J Clin Aesthet Dermatol. 2014 Jun;7(6):33-7). I examined 50 random vials. When sitting flat they appeared empty due to the optics of the thick glass, but when tilted, there was visible product waste (See image). I took a 32-gauge needle and aspirated the remnant product and found an average of 4 units of wasted Botox per vial. This can translate into many thousands of dollars in a busy practice. We changed the way we managed our reconstitution, which really made a difference. We remove the stopper, tilt the vial, and draw up most of the product with an 18-gauge needle and back fill 1ml syringes. Then we take a final 1ml syringe and using a 32-gauge needle, tilt the vial and draw up the last drops. These procedures (now commonplace for many practices) saved us a calculated $30,000 of lost revenue—years ago. We also couple this with switching to injection syringes with a plunger extension (again, now commonplace) that expels the very last drops of product.

Rally your staff to understand that waste is probably occurring. Provide a little bonus pool at the end of the year for proof of savings.

—Joe Niamtu, III, DMD