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    Try this rule of thumb for expense purchases

    Q: Help! Our practice is struggling not because we lack a steady patient load but because our overhead expenses are out of control. How can we get back on track and in the black?


    Thomas J. Ferkovic, RPh, MS
    A: While physician fees are trending downward, overhead costs, such as rent, utilities, malpractice and health insurance, and employee salaries, continue to grow. All can cripple even the most financially healthy practice by obstructing cash flow and decreasing profits. Although not all overhead can be controlled, savings opportunities are available if you look in the right places.

    First, follow this rule of thumb for expense purchases: If your practice overhead is 50%, every $1 of expense must bring in $2 of revenue to break even. Most practice overhead is 60% or more. Depending on the specialty, the target range should be 35% to 50%. To survive lower fees, review every line item of expense. Vendors often ask their suppliers for discounts, so you should do something similar. Put all your large expense items up for bid at least once a year. Review your staffing levels. The highest practice expense is staffing in most specialties.

    Pursue opportunities to negotiate savings, tweak existing procedures, or, in some cases, delete large expenditures completely, if feasible. Even the smallest of reductions over time can result in savings of up to thousands of dollars per year.








    Answers to readers' questions were provided by Thomas J. Ferkovic, RPh, MS, managing director of SS&G Healthcare Services LLC, Akron, Ohio. Send your practice management questions to
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