Generally the two largest costs for most professional practices are staffing costs and space costs. Staffing at the proper levels to ensure practice efficiency and to meet all contingencies represents a difficult challenge for practice managers in an environment of increasing costs.
Where to start in evaluating your staffing levels and costs?
A good first step is to gather benchmarking data from reputable sources, such as the Medical Group Management Association, the American Medical Association (AMA), the American Dental Association and the American Medical Group Association (AMGA), as well as your local medical and dental societies. For the broadest perspective, consult multiple sources. As you do, look for data that address the following:
• The number of support staff per full-time-equivalent (FTE) provider
• The percentage of gross revenue spent on support staff salaries
As you review the benchmarking data, keep in mind that practices that have historically been identified as better performing practices consistently have higher staff ratios than their peers. For example, MGMA surveys have shown that better performing groups focus on the delivery of care and invest in additional staff so that providers work up to the level of their licenses and as a result spend more quality time with patients. “Right staffing” generally results in a stronger bottom line since practices with appropriate staffing levels provide a better patient experience and allow for more efficient patient flow in the office.
If your numbers don’t line up with those of similar practices, it might be time to dig a little deeper. As you do, remember that a “slash-and-burn” approach isn’t always the best answer (and can actually be counterproductive). Rather than reflexively eliminating personnel, seek out ways to utilize existing staff to make providers more productive.
Look for inefficiencies. Are clinical staff performing duties that non-clinical staff could perform at less cost? For example, are nurses and medical assistants performing clerical duties?
Cross-train. Train billers and medical records people to run the front desk or phone patients with appointment reminders. This can pay off when you don’t have to hire a temp to cover for a staff member who is out sick or on vacation. You might also consider developing a list of secondary duties for staffers to tackle when they’re not busy with their primary job function in non-peak hours of the day.
Control overtime. Generally, substantial overtime costs indicate poor planning and scheduling. If extra hours are necessary, make sure that overtime is approved in advance and closely monitored. In many cases, it may be cheaper to hire another full time employee and pay salary plus 15 to 20 percent benefits, than to pay overtime at 150 percent.
Try some alternatives. Run the numbers on outsourcing your billing, payroll processing or bookkeeping functions. And don’t be afraid to explore job sharing (e.g., two practice nurses each working 20 hours a week), which can reduce the cost of benefits. Just note that too many part-timers can result in inefficiencies and redundant training costs.
Avoid “salary creep.” Instead of automatically giving raises year after year, establish a salary range for each position (high, low and median) that is competitive with your area of practice and location. If a high-value employee hits the top of the salary range, consider an incentive-based bonus instead of a salary increase.
Bid out the benefits. Fringe benefits, such as health insurance, represent a substantial portion of staff costs. Be sure to solicit competitive bids for your benefits every year or two. Also consider alternative benefit options, such as 401(k) and cafeteria plans, which are perceived as high-value benefits yet actually come with little cost to the practice.
Don’t get stingy. Finally, don’t be penny wise and pound foolish when it comes to compensating high-quality employees. Remember, great employees can get jobs anywhere. Ultimately, recruitment fees, training costs and the loss of productivity associated with turnover is much more costly than properly compensating high-quality staff.
Are you wondering if your practice’s staffing costs are appropriate for your practice? Our experienced professionals can provide an objective, third-party perspective.