About Careers Contact Client Portal
Services Industries Knowledge Center People

About Our Services

We offer tailored solutions — whether private company or owner; public or private fund, adviser or fund service provider; or Fortune 1000 enterprise. Learn how we can help you.

Learn More

Assurance Services

Employee Benefit Plan Audits Investment Company Audits Private Company Audits SOC Readiness & Compliance

Tax Services

Federal Tax Planning & Compliance High Net Worth & Wealth Transfer International Filings & Structuring Investment Company Tax State & Local Tax Tax Credits & Incentives Transaction Tax Planning

Advisory Services

Accounting & Finance Solutions Business Valuations Data & Insights Family Office Services IT Strategy & Implementation M&A Advisory Risk Assurance & Advisory Transaction Services Turnaround & Restructuring

Our Industry Expertise

Our industry experience means you can find professionals who speak your language and bring earned insights to the table. Learn how we can help you.

Learn More

Key Industries

Digital Assets Investment Companies Manufacturing Private Companies Private Equity Real Estate & Construction Technology & Life Science
VIEW THE COMPLETE LIST

Knowledge Center

Our team wants to help your team stay up to date. Browse our thought leadership, events and news for insights and a point of view on business-critical topics.

Learn More

Insights

Browse valuable articles and publications our experts have written to help you and your organization answer key questions — and consider new ones.

Read Our Insights

Events

Join us in person and online for events that address timely topics and key business considerations.

Explore Our Events

News

Find out what is happening at Cohen & Company, from industry recognitions and growth updates, to where we are contributing to important media stories.

Read Our News
People
About Careers Contact Client Portal
Back to Insights

Cut Costs to Streamline Your Practice

June 29, 2016 Healthcare

Maintaining profitability, staying up to date with the latest technology and providing quality patient services can be a difficult balancing act for medical practices. In addition to reckoning with health care costs, practices need to keep an eye on staffing, leasing and other costs. The goal, always, is to cut unnecessary expenses when possible. Below are some ideas for doing so.

Analyze Staff Costs

Staffing costs are typically the largest expense in most practices. It’s important to know the tasks that each employee is performing and ask questions such as:

  • Is every task necessary?
  • Is the task assigned to the right employee?
  • Are the tasks being performed appropriately?
  • Are there redundancies?
  • Can some tasks be combined?
  • Would it make sense to hire part-time employees for some work?

Compare the ratios of various types of staff per full-time physician to benchmarks from other practices.

Consider Salaries

Determine the salary norms for different practice staff categories in your market area. Stop awarding annual salary increases annually or haphazardly. As a general rule, give no more than the prevailing average in the area. Begin with a predetermined annual budget for staff raises, and do your best to allocate it on the basis of performance.

Ask your CPA to assess the fiscal and human-relations integrity of the compensation structure. That structure should include salary ranges for each position, with minimums and maximums arrayed around the local average. Consider slowing down salary increases as employees approach the maximum and providing incentive bonuses as an alternative to regular substantial pay increases.

Review Retirement Benefits

Is your employer-provided retirement plan still effective? A profit-sharing retirement plan, for example, may allow greater flexibility than the mandatory annual payment of a defined benefit plan.
If you do opt for a profit-sharing plan, pay attention to the plan’s vesting schedule. A good retirement-plan third-party administrator can run “what if” scenarios to get the desired results.

Look at PTO and Overtime

After checking state laws, establish written policies for paid time off, such as sick leave and vacation time, as well as for overtime. The industry standard for sick leave is five days a year. As an alternative to paying employees for unused sick leave, carry any unused days to future years or convert part of it to vacation time.

The industry standard for vacation time is two weeks (depending on service time). It’s important for hardworking employees to take regular time off to rest, and so staff members can share tasks and job knowledge. But set a limit on the number of days that staff members may carry forward each year.
When it comes to overtime, the office manager should determine when extra hours are necessary. Does overtime require prior approval? It should. Don’t make overtime payments to exempt employees (state and federal law determine exempt vs. nonexempt).


Examine Your Lease

Most leases provide that a tenant pay a share of building operating expenses over the landlord’s base amount — commonly known as the “operating stop” provision. Ensure that the landlord’s calculations include only legitimate operating costs.

Beyond that, ask yourself: Is the practice paying for more space than it currently needs or uses? Can we rent out any unused space? Can we renegotiate the lease? Some practices decide buying space is the most cost-effective approach for the long term. By paying off a mortgage instead of paying rent, they’ll eventually own a building.

But buying has some downsides as well. Buyers likely won’t have as much choice in location — and what to do if the space needs to change. Owners also have to deal with such issues as heating, air conditioning and building upkeep in-house.

Stay Vigilant

Unnecessary costs can creep up on any practice, dragging it down and keeping it from being as profitable as it should be. Don’t let small costs become bigger problems. Look over your bottom line regularly with an eye to cost cutting and revenue building.
 
Contact Kathy Walsh at kwalsh@cohencpa.com for more information.

Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this publication should be taken only after a detailed review of the specific facts and circumstances.

Sign Up for Our Emails & Events

Receive insights from our specialists in a variety of areas and timely information on upcoming events directly to your inbox as they go live in our online Knowledge Center.

Subscribe Today
Subscribe to our newsletter
About Contact Submit RFP Privacy Policy
LinkedIn Twitter Facebook
© 2022 Cohen & Company