Practicing dermatology is becoming more complex. Costs are going up, while revenue, in many cases, is going down. Ironically, dermatologists can do very simple things to make their more complex practices more efficient and profitable, says dermatologist Jeffrey S. Dover, M.D., who presented “Nuts and Bolts: Space, Staffing and EMR” at this year’s American Society for Lasers in Medicine and Surgery (ASLMS) annual meeting in Denver.
Dr. Dover’s nuts and bolts tips address the basic concepts of practice overhead.
“The first thing is a concept a lot of physicians don’t seem to get, or if they do, they don’t seem to practice it,” he says.
Yet, it’s the most important bottom line message about revenue: What matters is what you take home; not what you generate.
“Practices that generate a lot but have high overheads don’t do particularly well,” says Dr. Dover, who practices with 14 dermatologists and nearly 100 staff at SkinCare Physicians in Chestnut Hill, Mass. “People love the idea of having a fancy office and lots of staff and lots of equipment. But all that costs a lot. What you need to do is be cautious in your expenses and keep your overhead low.”
There are two ways in which aesthetic and medical dermatology practices, alike, can do that: One is to keep revenue high and the other is to keep expenses low.
Dr. Dover points to what are often big and fixable practice inefficiencies. For example, if practices have rooms that are not used and staff that are not accounted for, those issues can be overhead drains.
“The key is you want to make sure you’re using your rooms all the time. If you have eight rooms and are only using five, you’re paying for three rooms that you’re not using, and you might be staffing those. Another way to drive overhead costs down is to have evening hours, which patients love, and Saturdays, which patients love,” Dr. Dover says.
When it comes to making major equipment purchases, buy what you need — not what you want.
Dermatologists might be lured into buying lasers and other devices at meetings when companies run show specials. But that’s not the time to buy unless you’ve done your homework, first, according to Dr. Dover.
A simple equation can help to answer whether a device or other technology makes overhead sense.
Let’s say there’s a device that treats patients with telangiectasia of the face and the dermatologist doesn’t yet have such a device. She sees about three patients a week (12 a month) who would probably be willing to spend $600 per treatment. The dermatologist would figure the carrying cost of the device and as long as it is less than $7200 a month, the laser would be a money maker, according to Dr. Dover.
“You don’t just buy and hope patients will be there,” he says.
Another way to keep overhead costs down is to purchase technology or pricy equipment efficiently.