No matter what kind of practice you manage, you could probably be cutting expenses in at least one area: administrative costs. That’s not a callout; it’s the reality that most practices face, especially in complex industries like healthcare. In fact, experts say that administrative complexity within the United States healthcare system could contribute to a staggering $265 billion in waste annually. Keep reading for some budget tips.
Although the United States healthcare system may be an extreme example, practices across all industries can benefit from a structural evaluation of administrative spending. Keep reading to learn how to slash costs and maximize efficiency in your practice.
Evaluate Expenses
When you’re cutting expenses, your goal should be to lower unnecessary administrative costs, not to cut spending. So before you start making cuts, remember — arbitrary cost-cutting measures won’t get the desired results. Intentionality and strategy, however, can. These budget tips can help you hone in on the problem areas:
- Do some research – What do other practices in your area spend? Example: Medical Billing Specialists – what are they getting paid? Or what about Malpractice?
- Put expense data in one place – If you have a multitude of spreadsheets, messy financial statements and poor organization of this key information, you can’t ensure accurate data.
- Keep track of spending – Every expense needs to be accounted for, not just for tax purposes, but also for budgeting purposes.
- Make a budget – Make a budget based on what your practice can actually afford to spend to avoid unnecessary spending.
Streamline Budgets and Communication
An inefficient budgeting process isn’t going to help you cut costs. It’s just going to muddy the waters. According to Finance Digest, you can achieve a streamlined budget by standardizing your data and processes, focusing on primary business drivers (factors critical to your practice’s success), evaluating past performance and revising your budget frequently.
Without clear, honest communication, even a profitable practice will eventually fail. Experts on the Forbes Human Resources Council say that effective team communication includes transparency, consistency, availability, honesty, morale, goal alignment and utilization of available communication technology.
Maximize Deductions
With so many available tax deductions, your practice has the opportunity to save significant money when tax season rolls around. You will, however, want to hire a tax specialist to make sure you’re maximizing deductions. How do you know if you’ll be able to afford a tax specialist? You won’t know for sure unless you have a streamlined budget and easily accessible records. Without those things, tax season will be a major headache.
Important Budget Tips:
Leverage Technology and Automation
If you want to run a successful practice, you can’t be opposed to new technology. Like it or not, you’re going to have to leverage technology and automation not to get ahead, but just to compete. Here are some ways technology can help your practice grow:
- Digital marketing – Gone are the days of newspaper ads; in 2021, you need an internet marketing strategy that utilizes search engine optimization (SEO) and targeted ads.
- Web-based project management tools – These apps allow you to update your team in real-time and often include graph and visual representation capabilities.
- Automated routine tasks – In 2021, there’s just no reason to employ an individual to complete routine tasks like payroll processing, invoicing and accounting when automation software performs them so easily (and accurately).
- Remote working – If this is an option available to some of your staff, it’s worth considering for the workplace cost-saving benefits alone.
Improve Workforce Management and Organization
Ultimately, the main thing that will impact your ability to cut unnecessary administrative spending is your willingness to improve workforce management and organization. If you can implement a system that allows your team to easily communicate, share information, reduce labor costs, manage time and celebrate successes, you’ll be able to cut unnecessary expenses. Fortunately, there are many effective workforce management products on the market capable of doing exactly that.
Monitor and Report
A common avoidance tactic, when people are afraid of their finances, is to not look at them. Rather than taking a hard look at the issues, they continue business as usual. When it comes to your practice, giving into financial denial is the quickest way to ruin. Here are some more budget tips:
- Track your money and communicate among all partners and stakeholders.
- Develop a realistic budget with contingencies.
- Use automated systems when possible.
- Take advantage of the technology available to you to track spending, close reporting loops, invoice/collect payments, etc.
Toward an Ideal State: Efficient, Productive, Profitable
When a practice lacks self-evaluation skills, it’s easy for administrative costs to grow out of control. At the heart of financial success is an ability to see clearly — evaluating your systemic shortcomings and successes — and move toward the path of sustainable, concentrated growth. It is possible to grow more efficient, productive and profitable as you make strategic decisions. Simply deploy the right tools and reach consensus for internal operations.
Derek Jones (VP Enterprise Strategy, Americas)
Derek spearheads key initiatives at Deputy, a global workforce management platform for employee scheduling, timesheets and communication. With a focus on Healthcare, Derek helps business owners and workforce leaders simplify employment law compliance. As well as keeping labor cost in line and buildng award-winning workplaces. Derek has over 16 years’ experience in delivering data-driven sales and marketing strategies to SaaS companies like MarketSource and Griswold Home Care.
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