Supply Cost Reduction in The Physicians Practice

by
Michael Lawson
DOCTORSMANAGEMENT, LLC

The cost of practicing medicine continues to rise while reimbursements continue to fall. Add to this the cost of providing employee benefits, which are also rising, and it is becoming more difficult to operate a financially healthy medical practice. Assuming that coding and billing operations are functioning at proper levels of performance and employees are operating at peak levels of performance, there are basically two ways to increase revenue and, hopefully, increase profit as a result: see more patients or take on ancillary services. These are not always options for every practice, so the next opportunity to increase profits is to reduce overhead. Again, there are two basic ways to do this: cut supply cost or reduce HR cost. With each of these, the implication for the practice is the possibility of reduced practice performance and reduced revenue.
Reducing supply cost can be a formidable assignment. A supply program running at peak efficiency requires time, knowledge, resources, and dedication. However, by focusing on what is most within your control, you can achieve substantial savings. The obvious question for the practice manager concerning the cost of supplies and services is this: Am I getting the best balance of price versus product quality and service? In other words, am I getting value for the money?
An old adage states, “The bitter taste of poor quality remains long after the sweet taste of low price is forgotten.” The desired result is to not sacrifice quality for price. A cheap price often brings tradeoffs in other areas: service, performance, and durability. A sacrifice in any of these areas will increase the cost of the product through downtime, poor work output, and premature repurchasing.

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