Practices are coming under more and more pressure each year to maintain their levels of earnings whilst also delivering a high standard of care to their patients.
Although it is a challenge James Dickman, healthcare manager at chartered accountants MHA MacIntyre Hudson, says there are ways practices can increase efficiencies and reduce costs without having to spend a significant amount of time and effort achieving them
Everyone likes to think that they – and the role they perform – are indispensable. The reality is sometimes different and, often, savings can be made if you consolidate job roles rather than replace leavers. If a member of staff resigns or retires it is worth dissecting their job role to see whether existing people would be able to take on their responsibilities.
For example, if the bookkeeping and payroll functions are being performed by the person leaving, as well as other administrative duties, it might be beneficial to outsource the finance function to a specialist and to redistribute the admin elements to other staff. A pay rise and the cost to outsource are likely to be less than employing another person.
When possible, use partners to cover for sickness or holiday. This reduces locum costs and, therefore, increases profits, helping cash-flow at the same time. This logic can also be followed for non-clinical staff by offering time off in lieu (TOIL) rather than paid overtime to cover periods of absence.
Sharing staff resources within a wider network
As primary care networks and federations are top of the agenda currently there is a real opportunity to assess the wider pool of talented staff available to see whether it is possible to benefit from the expertise of each other. It may be possible for one person to carry out their same role for multiple practices, reducing the overall wage bill.
Staff costs are a significant proportion of a practice’s expenses so it will be beneficial to review roles and responsibilities regularly; this will allow the practice to ensure that each member of staff is being fully-utilised and there is no wasted time.
The constant evolution of accounting software – which has been further driven by HMRC’s Making Tax Digital programme – means that the software now available can be hugely beneficial to a practice. By working with the banks, software packages such as Xero and QuickBooks Online can automatically download bank transactions daily, direct to the software; this allows a practice to have real-time financial information available to them.
There are various reports which can be run in order to identify areas where spending may be abnormally high, without having to wait for the year end accounts, and with much more detail as you can ‘drill down’ into each cost heading.
The time savings which will be made by the finance team will also be a great benefit. Whether they are using manual cashbooks and records, or have been using a stand-alone software package, they will save a considerable amount of time with a cloud-based solution, freeing them to concentrate on other tasks. The cost of cloud-based software is often cheaper than the desktop version and is likely to be approved by HMRC for Making Tax Digital submissions; the desktop versions won’t necessarily be approved.
There are other online solutions for increasing efficiencies, such as moving to an online appointment booking system; even something as simple as using emails rather than letters will improve things, as long as the GDPR guidelines have been followed. This will help to cut telephone and postage costs as well as reducing the staff time previously required to fulfil these tasks.
Comparison sites make it simple for you to look for better deals when it comes to different utilities and insurances. These should be reviewed regularly to see if costs can be saved. A small change in a practice’s monthly energy costs, for example, could quickly result in large savings over the course of a year.
It is always important to consider the quality of the service or goods you will be receiving. Some things are worth the extra cost in order to ensure reliability and quality as standard – although a higher price does not always guarantee a better quality or service and, likewise, a lower price does not always represent good value.
It’s a mindset
These are a few useful tips to manage certain costs and promote internal efficiencies. Communication between practices and staff will help you to, collectively, find the most efficient processes which can be replicated and carried forward. Speaking to a specialist medical accountant is another good idea to aid you in drilling into the specifics of your practice, identifying any problematic areas and coming up with direct solutions.
Saving money isn’t a one-off, it’s a mindset. These examples offer some simple ways you may be able to stretch your finances, but they’re not the only ones. The most successful practices are those that are always looking for way to do more with less.
James Dickman is healthcare manager at accountancy firm MHA MacIntyre Hudson.