Managing an aesthetic or medical practice can be scary. Get tips and tricks from a seasoned pro who practices with 14 other dermatologists and nearly 100 staff members.
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.
“How many of these devices do you need per condition? Do you need two or three devices to treat facial redness? No, you only need one that you really like, that you’re good at using. How many devices do you need for hair removal? Either one or none because that’s a commoditized procedure. Most patients don’t come to dermatologists for that anymore. They go to med spas. Do you really need an ablative fractional laser if you’re only going to do one case every six months? Probably not,” he says. “I think the keys are to focus on things that are fun; things that you like; things that will make practice more interesting. But they’ve got to at least be cost neutral or generate some profit.”
EMR: A Necessary Evil
Electronic medical records (EMRs) are expensive. They take a long time to introduce into a practice. There isn’t much good to say about the EMR’s contribution to practice overhead.
“We found them not to be revenue neutral at all. They’re actually more expensive than our paper charts used to be,” Dr. Dover says. “But they’re nice to have. In our practice they are a must because of the issues with Medicare; if you don’t go to EMRs you’re actually leaving some money on the table.”
Dr. Dover says dermatologists have to look at the EMR as a necessary evil and be prepared to spend more money on the technology than they think to cover hardware, software, upgrades, licenses and to pay IT people.
“It took us over a year to get really good at our EMR, but I have to tell you it has not been easy,” he says. “Make sure that you know it’s not necessarily going to make your practice more efficient nor more fun. Choose wisely. It’s a decision that should be made with a lot of care.”
Hire Smart, Hire Nice
Building a stable, productive staff is most important for keeping a practice in the black.
“Staff is the most expensive cost in an office. Rent is a fraction of what staffing costs,” Dr. Dover says. “It costs a lot to lose a staff member. Every time you lose somebody you have to re-interview and re-educate. It’s not only a huge energy sink, but it’s incredibly expensive.”
The key is to hire well and for the long-term.
Dr. Dover says his best practice is to hire smart and hire nice.
“It’s hard to make someone who is not smart, smart. And it’s hard to make someone who is not inherently nice, nice,” he says.
Two other important qualities to add to the list: people who are empathic and naturally optimistic make the best employees, according to Dr. Dover.
“These are the four things that we look at when we interview,” says Dr. Dover, whose practice hired a human resources professional to help with interviews and hiring.
Doing structured interviews avoids the practice pitfall of dermatologists hiring someone they like - maybe because that person reminds them of someone - but perhaps doesn’t mean that the person will be a good employee.
“It’s also crucial to call all the references and not just to take the written reference at its word because you’ll hear things on the phone that you’ll never see in writing,” he says.
Dr. Dover, who has given this talk at other meetings, says his parting words are always that practices tend to run smoothly and successfully when dermatologists have colleagues in the practice they genuinely like and a work environment that’s fun.
“They don’t have to be your best friends. In fact, it’s best if they’re not. They should be people you respect, appreciate and like. Then, making sure that work and your staff are fun. We do all kinds of activities to try and keep things enjoyable here - from dressing up for Halloween [and] having regular staff outings, to hiring a food truck to come to our parking area and provide lunch for our staff. We also let the staff know how much we appreciate them by saying thank you!” he says.