Inside Secrets To Reducing Practice Costs
- Volume 19 - Issue 4 - April 2006
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How Good Purchasing Techniques Can Pay Off
It pays to shop around when ordering medical equipment and supplies as several experts say good purchasing techniques can lead to savings. Dr. McCord says one should determine the best equipment and supplies for patient care, and then make the medical equipment and supply companies compete for the practice’s business. His practice orders three-month quantities of supplies and obtains at least three bids for each item. Although supply company representatives may not like such a strategy, Dr. McCord notes it may save the practice up to 40 percent on overhead for medical supplies.
The practice should also assign one employee the task of ordering, notes Dr. McCord. The woman in his office who orders supplies will cut off the supply company rep for two months if he or she quotes a price that ends up being higher on the invoice.
Dr. McCann urges a practice to negotiate price breaks on supplies. He also suggests looking to a large supply company for good pricing on items such as gauze that are commonly used in high volume. Along the same lines, a practice should buy supplies in bulk and try to get hospital pricing, suggests Dr. Titko, who practices in Cincinnati. At least annually, she says a practice should compare the supply pricing listed by various organizations. She adds that watching expiration dates can also lead to lower costs.
When buying supplies at a meeting, Dr. Ornstein advises the meetings may offer “significant” discounts. He also suggests joining with another local podiatrist to purchase supplies together. Dr. Ornstein says he has done this when buying orthotics and durable medical equipment (DME), and it saved money.
While giving away medical supplies to patients can increase referrals, Dr. Frederick cautions against giving supplies to patients for free. He says giving away supplies like pads and Band Aids is the “number one problem” for doctors and can quickly add up in increased practice costs.
Communication is an important aspect of ensuring the proper ordering of supplies, according to Dr. Ornstein. He notes that a DPM should be able to communicate to a vendor what he or she wants the product to accomplish so the practice gets the right product. On the contrary, he says the vendor should be able to communicate via decent customer service to ensure quick delivery of supplies.
One should also carefully review supplier invoices as Dr. McCann notes that mistakes in billing can often occur. Anything which the staff orders for the office should have a purchase order with a control number that shows up on the invoice from the company from which it was ordered, notes Dr. McCann.
What Overhead Costs Can A Practice Reduce?
Following costs for staff and supplies, rent is typically the most expensive overhead expense, according to Dr. McCann. If the practice leases the office space, he says it should negotiate the best possible contract. He says it is also a good idea to get the landlord to paint the office or provide new carpeting at intervals that are included in the lease.
If the practice owns its own office space, Dr. McCann says one should keep an eye on interest rates as there may be refinancing opportunities that can reduce monthly payments.
Dr. Frederick says sharing office space with other doctors may be the most effective way to save on practice overhead. He notes one should also consider the use of credit cards that provide rebates or a percentage off purchases for the office.
Likewise, Dr. Titko suggests renting only the office space that a practice needs rather than having an overly elaborate office. Watch the thermostat in order not to incur heating and air conditioning costs that are too high, she advises. In addition, Dr. Ornstein suggests researching energy incentives, rebate programs with high efficiency units and low energy light/fluorescent bulbs, which may provide better light. He says all of these initiatives will save some money. If the practice is in a new office, he suggests installing a heating system in the floor to save energy costs.
When looking to save overhead costs, Dr. Titko also says one should compare various lab charges to look for a bargain. Careful handling of equipment can also obviate the costs of replacing it, according to Dr. Titko.