Cut costs to maintain profits

Thursday, January 31, 2008

In the face of dwindling reimbursement, providers are casting about for any and every way to reduce operating expenses.
Over the past year, some 61% of December's NewsPoll respondents reported that they'd managed to reduce their operating costs as a percentage of revenue, enabling a like percentage to maintain or increase gross profits.
So what are they doing? They're downsizing and cutting out deliveries; eliminating patient services; curtailing benefits; and implementing new cost-saving technologies.
"(We) reduced (our) employee health plan by 50%," said Rick Savage of Preferred Home Medical in Tyler, Texas. "(We also) had employees turn in company vehicles at the end of (day) instead of letting them take them home."
Employees seemed to bear a big brunt of the efforts to save money. Employers called a halt to the annual Medtrade trip for some. Employees lost hours as employers recast full-time jobs as part-time jobs and cut some jobs altogether.
"We have changed business models," said one provider. "(We) moved completely away from Medicare and most insurance business, went to cash sales (and) reduced staff by almost 80%."
Patients also felt the heat of providers scrambling to keep an even keel.
"(We) are asking patients to come in to our offices for setup in our CPAP treatment rooms," said June Sorensen, a provider in Lexington, Ky. "(We also) ask patients to schedule appointments and come to us for interface issues."
Many providers cited out-of-the-box delivery options and the implementation of new oxygen technologies as cost-savers.
"(We) increased use of courier services...rather than (use) our own trucks and delivery technicians," said Lynn Bryson, president of Roberts Home Medical in Germantown, Md.
One provider eliminated all non-revenue deliveries. Another moved to more efficient delivery vehicles. All American Medical Equipment in Oklahoma City found that it could impact its margins by increasing its sales team.
"If a salesperson is any good, they pay for themselves and two other employees," said CEO Kevin Jones.