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    Strengthen your cash flow

    Thomas J. Ferkovic
    Q: With continuing declines in third-party reimbursements affecting our bottom line, we realize we need to cut costs in our practice. What is the best approach to doing this?

    A: In the "good old days," medical practices needed to worry only about keeping costs within the limits of commercial third-party reimbursement levels. Over time, however, these reimbursements have been whittled down to approximate Medicare levels and are dropping closer to Medicaid payments. It's time to take inventory and see how your practice's cost profile measures up against Medicaid reimbursements. All expenditures should be viewed as savings opportunities. Although variable costs can be addressed quickly, practices focusing on only this area miss longer-range opportunities to slash fixed costs. These opportunities include overly generous benefits packages, excessive overtime allowances, overstaffing, overstocked supply inventories, not-so-lean operations, and even an office facility that is too large—to name only a few. All of your practice's fixed costs may not be set in stone. By working with your financial advisers and taking a careful look at where your money is going, you may be able to identify ways to lower these costs and strengthen your cash flow, despite a continual decline in reimbursements.

    Answer provided by Thomas J. Ferkovic, RPh, MS, SS&G Healthcare Services, Akron, Ohio. Send your practice management questions to

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