APMA News - July/August 2013 - (Page 48)

Small Business 101 From the American Academy of Podiatric Practice Management, the voice of practice management for the profession. By John Guiliana, DPM Cut the Cost of Doing Business Last month I discussed staff salaries, one of a medical practice’s largest expenses. This month, I will focus on two other costly items: medical supplies and health insurance. Medical Supplies For a typical practice, medical supply costs average from 8 to 10 percent of revenues. To assess your supply costs, start with some comparison shopping. If you have locked yourself into doing business with one vendor, especially for medical supplies, you may be surprised to find you’re not getting the best price available. You’ll generally do better if you develop a list of supplies you use and send the list to a number of vendors for bids. Do you seek out group purchasing opportunities? For example, a group of practices can purchase some supplies collectively (often through an independent practice association— IPA—or super group) at volume-discount prices. No medical office can afford to over-purchase and waste supplies. Review your inventory at the end of this month and monthly thereafter. If it remains high or increases, limit the amount of supplies your office purchases each month. Does your office have a clear purchasing policy? If not, develop one that does the following: Specifies how staff will determine what supplies to order each month Assigns one staff member the role of inventory coordinator and delegates to that person the authority for purchasing; the inventory coordinator is accountable for responsible purchasing and management of supplies Gives the inventory coordinator authority to collect requests for supplies, shop for the best prices, place orders, check items received against original orders placed, and inspect all related vendor invoices • • • Consider strategic management of expensive supplies by having the inventory coordinator keep track of a measure known as days in inventory. Computation of days in inventory will allow you to know just how much of an expensive item you have on-site before you will run out, given a stable rate of use. The formula to calculate days in inventory is as follows: Days in Inventory = (amount of inventory of an item on hand in dollars ÷ amount paid for all orders of that item for the past 12 months) x 360 in one location and standardizing the supplies used as much as possible. Then arrange for delivery of supplies to each office site. While you may find it useful to allow individual offices to share supplies to cover shortfalls in certain offices, don’t allow any office to independently order more supplies. Health Insurance Health insurance typically can range anywhere from 2 to 4 percent of practice revenues. Some practices have experienced recent annual premium increases of as much as 50 percent! As a first step in containing health insurance costs, review your current insurance coverage. Is it too generous for what you can afford? Naturally, a policy with a $250 deductible generally costs more than one with a $1,000 deductible. A policy that includes dental coverage costs more than one that does not. In an era of skyrocketing premium rates, it may not make economic sense to provide expansive health insurance coverage to employees. To offset the effect of rising insurance costs, many practices now require staff participation in premium payments to varying degrees. Have you solicited competitive bids for your health insurance coverage lately? It may be time to do so, especially if your practice has used the same health-care insurer for a number of years. Enlist the help of an independent insurance agent for assistance with bids. If you switch plans, lock in the premium rate for as long as possible. Don’t neglect the possibility of negotiating your way out of premium increases demanded by your current insurer. Were your staff members’ health-care expenses lower this year than last year? If so, you might have some bargaining chips. Speak with your agent. If your rates continue to increase over time despite costcutting efforts, you may be faced with the need to take more extreme measures. Your employees may need to pay part of their premiums—perhaps up to 50 percent. Check your state’s employment laws first, however, to make sure there are no limits on employee-subsidized premiums. Explore all possible alternatives to outright cancellation of employee health insurance. Without offering health insurance, you may have trouble attracting and keeping good employees. n Next month: To outsource or not. A good target to shoot for is about 45 days. A result that is too low means you may risk running out of inventory, while a number that is too high means you are tying up valuable capital. If you have a group practice with multiple offices, consider centralizing authority for purchasing medical supplies 48 APMA News July/August 2013 Contact Dr. Guiliana at Jguiliana@aappm.org.

Table of Contents for the Digital Edition of APMA News - July/August 2013

APMA News - July/August 2013
President's Message
Contents
Destination Hawaii: The National in 2014
Arizona Study Finds Podiatry Saves Lives and Reduces Expenses
Committee Nominations Requested
US Naval Podiatrist Trains Afghan Orthopedists
The Man Behind the Marketing: The New Face of Student Recruitment
The Benefits of Working with Residents
Bylaws Propositions Due
Health Policy and Practice Committees Meet to Tackle Reimbursement Issues
Reimbursement
ICD-10: How to Code a Typical Infection
Federal Advocacy Forum
Cosponsors to the Helping Ensure Life- and Limb-Saving Access to Podiatric Physicians Act
APMAPAC Chair Report
Resolutions Submission Deadlines
Coverage Corner
IT Consultant
Inside APMA’s Social Media
Website Wisdom
On the Road with APMA
Small Business 101
CPME Update
Young Physicians’ Accomplishments
In Short
Worthy of Note
Affiliates Corner
List of Affiliated Organizations
New Members
Death Notices
APMAPAC Update
Development Update
Annual Scientifi c Meeting Sponsors
Classified Advertising
Dates to Remember
Advertising Index
10 Questions
Your APMA

APMA News - July/August 2013