Many ways to save money at your medical practice

  1. Negotiate new contracts. The laboratory/pathology departments at the University of Arkansas Medical Sciences in Little Rock always used one blood bank. That is, until it decided to send out a request for proposals for blood bank services, on which it was spending $9 million a year. A new company, that offered enhanced services including education for physicians and staff, bid on the contract and saved the organization $1 million a year. “There’s nothing like competition,” O’Connell said.
     
  2. Implement an electronic medical record (EMR) vendor’s cloud billing. Pioneer Physicians Network, Inc., in Akron, Ohio, was looking at its EMR and decided to implement its vendor’s cloud billing, which allowed the organization to eliminate service hosting fees, provider licenses, support and maintenance fees. The cloud billing also handles automated processes. The organization saw savings of $125,000 annually for 42 providers with $1.8 million in monthly charges. Billing costs decreased from 6.5% to 2.9% of monthly collections. Shifting some of the duties from billing staff allowed them to spend more time on denial management, O’Connell said.
  3. Share equipment with multiple practice sites. The Cancer Treatment Center in Wooster, Ohio, is a radiology/oncology group with three locations. The organization realized staff at each location could share expensive oncology equipment that was not used all the time. The organization saved over $10,000 by not duplicating equipment.
     
  4. Create an expired supply product board. The Mayo Clinic in Rochester, Minnesota, created a board to track soon-to-be expired supplies. The interventional radiology department maintained a large array of supplies to accommodate a wide variety of complex procedures. The organization created a place to post supplies that were close to their expiration date so that doctors were aware they should use those products first. It cut the cost of expiring products from 10% to 1.2% of their total expenditure. The product board was implemented quickly and it took a great amount of management for staff to understand how to use the board and realize they were not impacting perceived care to patients. Collaboration, however, created cost savings, O’Connell said.
     
  5. Consolidate medical and general office supply vendors. Evergreen Health Care in Baltimore is a primary care practice co-op with four locations. Leaders consolidated medical and office supply purchasing with one vendor with an annual savings of $5,000. The consolidation resulted in 15% savings on most products, no minimum shipping, and centralized ordering. It demonstrated that a focus on simple efforts can have a great financial impact, he said.
     
  6. Consolidate vaccine supply purchasing. Children’s Practicing Pediatricians in Columbus, Ohio, had its member practices take advantage of purchasing vaccines in bulk before price increases went into effect. Some 400 providers participated with cost savings of 5.5%. Practices saved between $1,000 to $20,000. Issues for practices to consider are the cash flow since inventory needs to be prepaid and having the space to store vaccines, since they may need to be refrigerated or frozen. Each pediatric group now makes the decision on a yearly basis about vaccine ordering depending on cash flow, inventory storage, and potential cost savings.
     
  7. Improve energy efficiency. “We waste a lot of energy each and every day,” O’Connell says. One medical practice participated with National Energy Compact and hopes to see a 20% reduction in energy by 2020. In non-clinical areas, the practice sets temperatures at 74 degrees in summer and 68 degrees in winter. It also locks thermostats so they cannot be adjusted manually. It saved approximately 1%-3% in energy use. “They saved millions of dollars,” he said. But expect complaints from staff who are too hot or too cold. To get employees on board, the practice asked staff to sign an energy pledge encouraging them to walk the stairs if able, wear layers of clothing and turn off the lights when not in use. It’s an effort everyone can contribute to, he said.
     
  8. Reduce red bag waste. Also known as regulated medical waste, this includes blood, body fluids, discarded sharps, inoculated culture media, tissues, and slides. “There’s a lot of people who don’t understand it’s expensive to use the red bags,” O’Connell said. Practices can save money by decreasing the number of incorrect items being placed in red bags when they can be placed in regular trash. One practice saw an annual savings of $100 per provider.
     
  9. Reformulate operating room packs. Unused surgical and anesthesia supplies must be either discarded or re-sterilized, creating lots of waste. A health system and medical group reformulated packs for a hospital and ambulatory surgery center ORs. A team reviewed pack use and gained support for eliminating unused products. By consolidating 60 packs down to less than 20, the organization saved over $200,000.
     
  10. Use purchase orders and reduce check request spending. One organization realized a lot of people circumvented its purchase order process. Check requests circumvented the sourcing and procurement process limiting the ability to manage, spend, generate accurate reports and provide metrics. Eliminating inefficiency in its supply chain management process saved money.
     
  11. Create bar scanning technology for smartphones. This can allow for a significant reduction in marketing and community affairs budgets for printing costs. Since most people own a smartphone, one organization, which did a lot of community outreach events, reduced spending on printed materials and handouts by creating bar scanning stations where patients can use their smartphone to download health information directories and educational materials. The potential savings is $3,000 for small practices and $20,000 for larger practices.
     
  12. Reduce unused, expired medications. Medications have an expiration date. One group found they had a lot of drugs that had high costs and low volume case use so they tended to often expire before they are used. When medications are within two months of their expiration date, the practice logs them on a site and shares the information with other locations via email. Exchanges are made within the network to prevent items from being thrown away. An oncology practice saved over $100,000.
     
  13. Re-sort supply vendor catalog. One practice discovered that when staff went onto a vendor’s site to order supplies, they didn’t necessarily find the lowest priced items. For example, when typing in “Post-it notes”, the catalog showed the first item as a brand name 12-pack for $10.00 while several lines down it showed the generic product for $2.00—a savings of $8.00. They were able to change the “sort” function so that the cheapest product shows up first when using a standardized supply catalog online. The result is a 19%-20% cost savings.

To read more, go to https://www.fiercehealthcare.com/practices/30-cost-saving-ideas-work-physician-practices-mgma-michael-o-connell