3 steps to controlling staff costs

After provider compensation, costs for support staff are the biggest expense of running a medical practice. Even with good practice management, you and your office manager often may feel as if you never can get staffing levels just right, which is understandable. Too many variables are involved to achieve or maintain perfection.

Because work generally expands to fit the time available, excess staffing costs can result from employees being added during periods of high load-during flu season, for example-or when converting to open-access scheduling. Staff members then might be permanently retained even after work patterns change, seasonal impact ends, or short-term projects are completed.

On the other hand, understaffing may reduce costs over the short term, but it usually increases the emotional costs of physician stress and staff complaints of overwork, and it can reduce your efficiency to the point where costs increase as a percentage of collections.

Here are 3 steps to determining the appropriate staffing
balance for your practice:

ESTABLISH A BUDGET

Management consultants commonly find that the most productive doctors have higher-than-average staff counts. Their personnel budgets are higher, but so are their profits. One of the solutions to finding the right staffing balance is to establish a staffing budget. The first step to doing so is to look at benchmark data for practices that are similar to yours. The two best sources of staffing data:

• for small and solo practices-the National Society of Certified Healthcare Business Consultants (NSCHBC) (www.nschbc.org) Statistics Report for small and solo practices

• for large and multispeciality practices-the Medical Group Management Association (www.mgma.com) Costs Survey.

Both organizations offer sample reports online.

According to the NSCHBC, median staffing for solo and small primary care practices is three to four full-time equivalent support staff per doctor, presuming no nonphysician providers or ancillary services and approximately 20 to 25 patient office visits per day. The budget for this level of staffing typically approaches 20 to 24% of gross collections.

ADJUST FOR YOUR PRACTICE

The next step in determining the proper staff size for your practice is to adjust the benchmarks you find for staff count and costs to account for any particular circumstances related to your practice, such as staff productivity, payer mix, capitation payments, use of quality measures, and local wage levels. An older physician whose patients have aged with him or her will have different staffing needs than a newer doctor with a younger patient mix.

It also is important to consider the skill level of staff members. We all have observed those exceptional people who seem to effortlessly do twice as much work as their colleagues.

Once you have tailored the benchmarks to suit your circumstances, you will have a custom benchmark that you can use to evaluate staff costs and easily can update it annually to compare with the national surveys. For example, if the surveys show that costs have increased 2% in a particular year, then you can apply that adjustment to your custom benchmark.

OBTAIN INPUT FROM STAFF

The final step in the process is to discuss your findings with your staff members and solicit their input for staying within budget, then review the data monthly. First, you and your staff members should read the book TheOne Minute Manager by Kenneth Blanchard, PhD, and Spencer Johnson, MD.

The bottom line to investing in the effort of budgeting, just as it is in investing in other good practice-management behavior, is a flowing, more profitable, and less stressful practice.

The author is a medical practice management consultant in Santa Rosa, California, and a Medical Economics editorial consultant. Send your practice finance-related questions to medec@advanstar.com.