Overhead Reduction in Tough Economic Times – Part 1
By Cheyenne Brinson, MBA, CPA
KarenZupko and Associates, Inc.
A penny saved is a penny earned – that’s of course from Benjamin Franklin. And back then a penny was worth something. In today’s tough economy, hand surgeons across the country keep asking the same question, “how can I save money—big money?” This is part one of a three part series on overhead reduction.
Salary expense is likely your number one expense. Oftentimes, practices freeze salaries, eliminate bonuses, lay off staff or not fill critical positions. Sometimes this is necessary to maintain a positive cash flow. Often times, salary expense can be reduced by taking a hard look at efficiency and technology in the practice.
A three physician hand surgery practice (which includes 5.5 FTE therapists) was able to save approximately $63,250 annually by examining their billing office. They eliminated 1.20 FTEs from the billing office – and were able to IMPROVE efficiency of the remaining 5.0 FTEs in the billing office. How did they do this? The number one reason is technology. This practice deployed the following technology, saving staff members a significant amount of time:
Electronic Funds Transfer (EFT) – Most major payors actually encourage practices to sign up for EFT which is the equivalent of direct deposit of your insurance checks. Medicare requires it. EFT, combined with remote deposit capture (RDC) discussed below, will significantly reduce the number of checks your staff have to deposit. And it’s better audit control. There is no cost to sign up with your payors.
Remote Deposit Capture (RDC) – This is a service typically offered by your bank or credit card vendor. Using a scanner, the checks are converted to ACH (Automated Clearing House) transactions, in essence converting a paper check in to a direct deposit. There is a fee associated with this service but typically the fee more than pays for itself in time savings. To determine what the ROI (return on investment) is for your practice, add up the amount of time it takes staff to complete a deposit slip, go to the bank to make the deposit. In this practice with a large volume of checks, staff spent four hours per day making the deposit slip and going to the bank. Added benefit – staff satisfaction went up significantly of not having to do these tedious tasks anymore!
Electronic Remittance Advice (ERA) – ERA is an electronic file that allows your staff to electronically post an EOB (Explanation of Benefits), rather than manually keying the data in. The time savings are incredible. All major payors offer ERA and the key is to utilize your clearinghouse as the “quarterback” for ERA.
Electronic Filing of Worker’s Comp Claims and Secondary Claims – any biller will tell you how much time is spent filing worker’s comp claims. It’s a manual process and time consuming. There are clearinghouses that now offer electronic filing of worker’s comp claims. An additional fee will apply – but well worth the price. Also ask your clearinghouse if they are able to automatically file secondary claims. Most secondary claims are filed manually and require the use of a black marker to mark out the other patients names on the EOBs - a very laborious process.
Batch eligibility – your practice management system or clearinghouse should have the capability to automatically verify the insurance of scheduled patients (granted you have to pre-register your patients first) using the upcoming schedule. This “push of a button” technology frees up staff time from visiting numerous payor websites or sitting on hold with a payor to verify insurance coverage.
Not only did deploying these technologies save the practice $63,250 annually in salaries and benefits, the morale of the staff increased significantly. They were happy to be more efficient and use technology to make their jobs easier.
Next month: Ten cost saving strategies to save your practice money.
About the Author
Ms. Brinson is a practice management consultant and speaker with KarenZupko & Associates who helps physician practices build solid internal controls, reduce overhead, and increase revenue.
Author Contact Information
Cheyenne Brinson, MBA, CPA
Consultant and Speaker, KarenZupko and Associates, Inc.
625 N. Michigan Avenue, Suite 2225, Chicago, IL 60611
(312) 642-5616 ext 220