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Here are some tips for cutting your expenses and increasing your revenue — without losing staff.

Fam Pract Manag. 2000;7(10):37-40

Those of us involved in the management of our practices go through a ritual dance toward the end of each fiscal year called “make more or spend less.” Either our practice is over budget, or the health care system is, and we need to improve the bottom line.

Unfortunately, when belts need to be tightened, we often target the biggest expenses — beginning with staffing. It doesn't have to be that way. There are a number of less obvious expense-cutting targets you can aim for, and no one has to get hurt.

Of course, cutting expenses isn't the only way to “find” money in your practice. You can also maximize your revenue by ensuring the amount of money you bring into the practice matches the amount of work you do. This can be done by reviewing your billing, coding and marketing practices.


  • When the bottom line needs to be improved, staffing is usually the first target — but it doesn't have to be.

  • A thorough review of your monthly expense report can help you find painless ways to cut your expenses.

  • You can maximize your revenue by improving your billing, coding and marketing practices.

Cutting back

To uncover the less obvious expense-cutting targets in your practice, start by carefully reviewing your expense report. Find the five biggest items on the list, and track down exactly what makes up each expense. Each month move on to another five. If your practice is anything like ours, you'll find that every line on the report can yield at least a few hundred dollars a year in ongoing savings. Here are some things to watch for as you review your expense report:

Outdated preferences. Every physician is different. Some simply must have this instrument or that medication on hand, while others don't give a hoot but must have a certain color drape. If you've had physician turnover since the practice opened, you'll almost certainly find expenses that have continued in an attempt to meet the needs or wants of physicians who've already left the practice.

When I went hunting for waste, pharmacy expenses jumped off the page. We'd been keeping more than $1,000 worth of medications on hand that none of the current physicians wanted, and we'd been spending $600 a year on single-use tubes of water-based lubricant. Half an hour later we'd switched to large tubes, dropped all unnecessary medications from our supply list and saved ourselves $1,450 per year.

Outdated systems. Processes that made sense in the past may be nothing more than needless expenses now. This turned out to be the case with our old progress-note system, which involved printing transcribed notes on sticky paper and attaching them to progress-note paper. The original purpose had been to decrease the number of pages in the chart by cramming as many notes onto one page as possible. However, the result was that we'd paid staff for about two hours per day of extra work, made our charts 50 percent thicker and 75 percent heavier and spent more than $5,000 per year on sticky paper — an expense that we'd somehow continued to incur even after switching to a new progress-note system that doesn't involve sticky paper. We've since cut that unnecessary expense and saved ourselves $5,000 per year and 0.5 FTE worth of records work.

Outside services. Take a look at the money you spend paying other companies to do your work. Can you find a less expensive company to use? Can you do the work yourself?

Several years ago we hired an outside medical records company to help us through a period when we needed to copy hundreds of charts. Although the acute need had long since passed, we discovered the staff had continued to send all charts needing to be copied to the outside company. Now we copy medical records ourselves, bill for the service to offset the expense and save about $5,000 per year.

We were also paying thousands of dollars a year to a local grounds-maintenance company to mow, fertilize, remove snow, etc. The company, which was the same one used throughout our system, scalped the grass and didn't weed, edge or shovel the walks (meaning we took turns shoveling and salting so our patients could get to our front door). So, we decided to negotiate a new contract with another vendor, which saved us about $2,000 a year, and now we get the level of service we need. It's amazing what the hungry competition will do to break into a locked-up market.

Are you getting the most out of your practice?

If you answer “yes” to any of the following questions, you could be wasting money and not reaching the full financial potential of your practice:

  • Are you buying medical and office supplies based on former physicians' preferences?

  • Are you paying for the costs of an office system that's now defunct?

  • Are you paying an outside company for work that could be done more cost-effectively within your practice?

  • Are your staff members doing other offices' work on your time?

  • Are you neglecting to bill for all services you perform?

  • Are you undercoding your services?

  • Are you losing revenue for simple procedures simply because your patients don't know you do them?

Other offices' work. If any of your staff members are feeling overworked or are putting in an unusual amount of overtime, it could be that they're doing the work of other offices in your health system. When we asked our coders why they were putting in for overtime, they said they could finish our office's coding on time but not the work handed to them by other offices when they fell behind. Not only were we paying our employees overtime for other offices' work, but the health system was incorrectly attributing the expense to our office. Now we don't allow our employees to do work for other offices until all our work is done (and they don't get paid overtime if they do help). We've also found that we can decrease our FTEs by 1.5 by sharing one of our coders and transferring one of our data entry personnel to the central billing office.

We did a study on how our radiology technician was using her time because the volume of X-rays and EKGs she read seemed low when compared with how busy she told us she was. We found that 20 percent of her time was spent pulling X-rays for another office that stores some of their X-rays in our basement. Now the other office pays for that 20 percent.

Nine out of 10 times when we look at what seems like an unusually large expense and simply ask “why,” we're able to find a painless way to cut our expenses. Cut waste or cut staff? You decide. [For more information about how you can use your financial statements to improve your practice, see “FPM articles on financial statements.”]

FPM articles on financial statements

For more information about how to make your practice's financial statements work for you, review these articles from the Family Practice Management archives:

Four Steps for Improving Efficiency and Cash Flow.” Guira PA. October 1999:14–15.

Monitoring Your Practice's Financial Data: 10 Vital Signs.” Aymond R. July/August 1999:42–45.

Questions to Ask About Your Accounts Receivable.” Capko J. February 1998:8–13.

“Managing Your Practice Using Month-End Reports.” Tinsley R. November/December 1995:94–95.

“Making Your Financial Statements Meet Your Needs.” Katz RW. April 1995:76–77.

You can't cut your way to wealth

Now you're not throwing money away, but you still need to maximize your revenue. The only good way to do this is one that doesn't require more work, isn't bothersome, doesn't anger the patients and doesn't decrease the quality of care. This is the Holy Grail of business, and the way to attain it in health care is to bill for everything you can, code appropriately and market your services.

Bill for everything. At least 25 percent of all reimbursable services are not billed. For example, our practice was neglecting to bill for some of the birth-control services we provided. While our nurses usually billed for the depoprogesterone injection itself, they never charged for the medication being injected, the nursing visit or a urine pregnancy test if one was done. We also failed to charge for the five IUDs we inserted per year and the countless supplies we dispensed. On birth-control services alone, we were losing about $20,000 per year.

Here are some tips to help stimulate your thinking about overlooked billing opportunities. For your patients with asthma, are you billing for the nebulizer treatments, the dispensing of a peak-flow meter and the performance of a pulse-oximetry or pulmonary-function test? If your insurer provides separate reimbursement for specimen collection, are you billing for it?

Code appropriately. In my experience, the average physician undercodes by about 25 percent, and older physicians and rural physicians undercode by as much as 50 percent.

If a woman comes to your office for a well-woman exam and management of her active medical problems (hypertension and hypercholesterolemia, for example), are you coding for both? Submitting a preventive-medicine code and a problem-oriented code with a -25 modifier (to designate that you provided a significant, separately identifiable evaluation and management service on the same day you provided the preventive service) will maximize your reimbursement for this visit.

As another example, look at asthma-related services. In addition to being billed too seldom, they are often undercoded. When a patient has a red-zone exacerbation, is your documentation sufficient to code a level-IV visit?

Simply put, if you and your partners did nothing but learn how to code a 99214 without fear, your revenues would increase (legally) by at least 15 percent. [For more information about coding level-IV visits and other billing and coding subjects, see “FPM articles on billing and coding.”]

Market your services. You could be losing revenue for simple office procedures simply because your patients don't know you perform them. A big area of under-utilization for family physicians is dermatology. How many patients who need cryotherapy for actinic keratosis have you let out of your doors? I've found that my own patients will wait four months to see a dermatologist for acne but never think to ask me. Now I ask everybody who has visible acne if they would like me to improve it, no matter why they've come to the office. Anything my patients need that generates $50 for five minutes of work and has no real associated risks has a permanent place in my practice.

[To find out how one family physician easily and inexpensively informs patients of his services, see “Remind Patients of Your Scope of Practice,” October 1998, p. 60.]

FPM articles on billing and coding

For more information on how to improve your billing and coding practices, review these articles from the Family Practice Management archives:

ICD-9 Coding: Every Digit Counts.” Moore KJ. October 2000:16–20.

New Diagnosis Codes Take Effect Oct. 1.” Moore KJ. September 2000:15–18.

Coding Level-One Office Visits: A Refresher Course.” Giovino JM. July/August 2000:39–42.

When to Bill for a Consultation.” Moore KJ. November/December 1999:11.

Improve Your ICD-9 Coding Accuracy.” Hill E. July/August 1999:27–31.

A Quick-Reference Card for Identifying Level-4 Visits.” Giovino JM. July/August 1999:32–34.

Take Charge of Coding: Don't Lose Income to Neglect.” Epperson WJ, Hubach KS, Menn KE, et al. March 1999:37–38.

Final thoughts

Keep these things in mind next time you take part in that year-end ritual dance, “make more or spend less”:

  • Be the big-game hunter of your expense report, and ask “why” when expenses look high.

  • Bill all reimbursable services.

  • Learn to code a 99214 office visit.

  • Perform cryotherapy.

  • Take pride when you find waste —the office staff you didn't have to fire will thank you.

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