Controlling expenses requires prudence, monitoring, and teamwork

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Many physicians see productivity as the sole measure of a healthy clinic. While it is true that a nonproductive clinic cannot stay open (see “To maximize productivity, use benchmarks, delegate tasks, and download free web-based tools”), no amount of productivity can save a clinic from wasteful spending or poor investments.


Pragnesh Vachharajani, MD“In the initial years of setting up a practice, expenses are always high. However, you should opt for the best possible equipment. In the long run, top-notch equipment carries low maintenance fees.”
—Pragnesh M. Vachharajani, MD, a family physician with a special interest in obesity and lifestyle-related disorders in Ahmedabad, Gujarat, India, and a member of mdCurrent-India’s Editorial Advisory Board


“Do not spend on things that you feel are unnecessary,” says Raghavendra D. Kulkarni, MD, professor and head of the Department of Microbiology, SDM College of Medical Sciences and Hospital, Dharwad, Karnataka. “Resist peer pressure. A posh clinic may impress patients, but ultimately professionalism, your rapport with patients, and your attention to patients’ medical problems are the most effective practice-builders.”

Kulkarni, other doctors we spoke with, and clinic management experts offer the following tips for controlling clinic costs:

Key Point: Control expenses by making prudent purchasing decisions and carefully monitoring revenue and costs.
  • Spend prudently.
  • Focus primarily—but not totally—on productivity.
  • Purchase quality equipment.
  • Monitor expenses as well as revenue.
  • Ask employees for help.

Prudence and good judgment are paramount

New physicians who have limited or borrowed funds should think carefully before making purchases. For example,[s2If !is_user_logged_in()]…

[/s2If][s2If is_user_logged_in()] is buying your own clinic building the most prudent course, or would partnering with other physicians be a financially safer decision?

“Opting for a group practice gives you an edge,” says Pragnesh M. Vachharajani, MD, a family physician with a special interest in obesity and lifestyle-related disorders in Ahmedabad, Gujarat, India, and a member of mdCurrent-India’s Editorial Advisory Board. “You can buy a larger space and offer more services if you share expenses.”

Likewise, because real estate in major cities is quite costly, if you establish your clinic in a less populated area you can secure a better building at a lower price. Another option, according to Vachharajani: corporate hospitals offer leasing arrangements to consulting physicians, provided that they refer to the hospital for procedures.

“The idea is to strike balance,” Vachharajani adds. “If you have the best possible facilities in place and income is still stagnant, then productivity should be targeted.”

Productivity and quality equipment guard against losses

Consistent productivity is how Kulkarni guards against rising expenses.

“Money saved is money earned,” he says. “But if you focus only on saving, you will be out of business quickly.”

New physicians, especially those in procedure-oriented specialties, may be tempted to cut costs by purchasing less expensive equipment. The lower price, however, typically indicates inferior quality. In the end, that physician will spend more on equipment repairs and replacements, Vachharajani says.

“In the initial years of setting up a practice, expenses are always high,” he says. “However, you should opt for the best possible equipment. In the long run, top-notch equipment carries lower maintenance fees.”

Diligent monitoring

Once you have purchased real estate and equipment, controlling expenses such as wages, supplies, and utilities is just a matter of careful monitoring and teamwork.

“A regular audit of clinic expenses is required,” Vachharajani says. “This helps you identify bleeding areas so you can fix them. Regular maintenance brings down operating costs and makes machines more productive.”

Vachharajani reviews his clinic’s revenues and expenses monthly, quarterly, and yearly and he adjusts his fees to offset rising wages and other costs. This type of monitoring will help prevent surprises, such as an unexpectedly small bank account balance.

“Every practice needs to review finances and facilities regularly,” Vachharajani says. “Controlling expenses is a team effort that requires constant support from every team member.”

Prudent cost management is important for a healthy, long-lasting practice, but do not let it distract you from concentrating on your top priority: patients. Your productivity will ultimately dictate how strictly you need to control expenses.

“If I spend only on necessary things then I do not need to worry about costs spiraling out of control,” Kulkarni says. “If we cannot spend on things necessary to run our business, then better to close it down.”

Clinical cost management checklist:

  • Focus on value—and quality—when purchasing real estate and equipment.
  • Consider less expensive alternatives, such as partnering with another physician.
  • High productivity offsets high expenses.
  • Conduct regular financial audits.
  • Remember that patient care is your top priority.

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