Silent expenses eat away at profits
By Stephen W. Earnhart, MS
CEO
Earnhart & Associates
Houston, TX
It's pretty easy to control costs you are aware of and see every month, but what about those expenses you don't see? What about those expenses that you don't think about or would not even consider an expense? They're eating your profits just as quickly as overtime and supplies. They are the silent expenses you rarely think about. I have listed a few of them, in no particular order, for you to consider:
- Re-credentialing. Just about anyone who touches your patient who is not an employee must be credentialed. You did this years and years ago with surgeons, RN first assistants, anesthesia personnel, etc. Every couple of years they need to be re-credentialed, even if they have not been there or are no longer active or haven't done a case in forever. That re-credentialing costs money! Go through your list of credentialed personnel and see who can come off of the list going forward and save time for your re-credentialing staff. Remember: When you save time, you save money.
- Initial credentialing. The average cost to credential a surgeon or anesthesia provider is becoming expensive as the "primary source verification" process becomes more and more of an issue. Surgeons who aren't really surgeons sneaking into your facility have created more of a legal liability that you are paying for as a result. Consider a new applicant to your facility paying for their credentialing or at least a portion of that process. You don't want to scare them away, but you also need to make a profit. Unnecessarily credentialing a surgeon who might never step foot into your facility is a waste. Also, if you have a new anesthesia group covering your facility, don't think you need to credential all 76 of them. Insist upon only those who will be rotated through.
- Vendor access. Every time a vendor enters your facility, it costs you money. You are paying for those meals and doughnuts in other ways. We all need our vendors, and most are helpful in getting us out of tight situations at times; however, set some boundaries for them. No vendor should be allowed to simply walk into your facility without an appointment. We all know that there are some vendors who can slide a product in without us being aware that we ordered it. Don't see vendors when you know your schedule is going to be hectic or you will not have time to sit down and really listen to what they are pitching. Schedule around your convenience and not when they "happen to be in the area." (For more on handling vendors, see stories in December 2013 and January 2014 issues of Same-Day Surgery.)
- Rotate your supplies. First in, last out (FILO). Supplies outdate quicker than you think. Sending back supplies because of outdates is expensive and often unnecessary if you rotate your supplies as they come in. FILO makes cost-control simpler. Educate your staff.
- Chasing phantom surgeons. How much time have we all spent chasing the surgeons who say they are interested in doing cases at your surgery center or hospital but never do? I am guilty, for sure. How many dinners do you buy them? How many phone calls do you make? How much time do you spend in their waiting room before you see them to pitch, once again, the merits of your hospital or surgery center? What works for me, after many years of doing it wrong, is only three attempts. At the third meeting, I simply let them know that this contact is my last one with them outside of the hospital or surgery center. The next time we meet will be at the facility or not at all. I'm surprised, but it works if they are serious about doing cases there. If not, you have saved time and money. Again, time is money.
- Wasted equipment purchases. We all have equipment our surgeons insisted we buy that they saw at some trade show. We have all heard that it was going to increase their cases by 200%. We all have trouble finding a place to park it in a dark room, and then they use it only once or twice. Challenge the surgeons on these purchases (and anesthesia can be just as bad)! Insist on a simple statement by them that documents that if you buy this equipment, they will use it a minimum of XX times on new patients. Get it in writing! It is not a contract or binding or anything legal; it's more like a pledge. It will take you a while to get this pledge from them, if ever, but during that time the excitement of the new toy will wane and probably, and appropriately, go away, saving you thousands.
- Staff apathy. It cost you more than you might think. This trait can cause significant decreased productivity and can be expensive. Most of the time, the staff member is simply bored. Motivate or eliminate staff members by giving them specific goals or tasks that are different from their day-to-day ones. When they reach the goal or finish the task, reward them! Give them movie tickets, a promotion, an extra day off, a small trophy, or anything else that demonstrates to them and to others that they are being acknowledged for something special.
- Let others pay for your stuff. Stop paying for new canned pictures in your lobby when there are artists everywhere that would love to display their art in your facility free of charge! They are out there. Look for them, and also ping your own budding artists among your staff and surgeons. Let them come in and change out your drab store-bought pictures. Magazine subscriptions are expensive. Let local vendors (local and franchised pharmacies love this!) buy them and put them in neat, orderly jackets for your waiting room. They also will maintain and rotate them. Your patients love them, and it cost you nothing to stay up to date on publications.
- Ask and ye shall receive. Need something for your department or facility that you don't want to spend money on yourself? If you need a new TV in the lobby or lounge, electronic medical record software, a cable subscription, uniforms, just about anything you can think of, ask for it! You would be amazed at the things that stores and vendors will donate to your waiting room, lounge, locker room, parking lot, and supply rooms. They will donate just about anything, and it cost you nothing. Advertising outlets are huge with vendors. They are looking for areas to promote their services and goods. Let a local business sponsor your next board meeting, or staff meeting, or party. All you need to do is ask!
- Spend money to save money. It seems as if when businesses, including us, are trying to save or control their costs, they cut back on marketing and staff education and training. This mistake is the worst one you can make. An educated staff is a cost-effective staff. Spend money on educating them so they can become rejuvenated at their job and can find other products that work better and are less expensive. Newsletters and meetings — local, regional, and national — truly do make a difference. Spend money where it does the most good. [Earnhart & Associates is a consulting firm specializing in all aspects of outpatient surgery development and management. Earnhart & Associates' address is 238 S. Egret Bay Blvd., Suite 285, Houston, TX 77573-2682. Phone: (512) 297.7575. Fax: (512) 233.2979. E-mail: [email protected]. Web: www.earnhart.com.]
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