Want to reduce your imaging center’s overhead? The question takes me back to the early 1980s, when the father of a dear childhood friend practiced medicine. We used to spend hours making paperclip chains and driving his secretary crazy in the early 1980s. I remember that office well. From the perspective of today, it was a museum of medical practice overhead costs. There were several IBM Selectric Typewriters, a couple of adding machines, a fax machine, phones and a safe for document storage—in case there was a fire. There was a closet full of supplies for all these administrative tools. All the records were kept on a carbonless form system called Control-O-Fax. (Control of facts. Get it?)
This is fun to remember, but I bring it up because while the world has most definitely changed, some of the old ways of doing things have not. Your imaging center staff may not be pressing extra hard to make a second copy on the Control-O-Fax form, but they’re probably not that far off from the practice.
What is Overhead?
This is not a trick question. We all think we know what overhead is, but we sometimes don’t see it when it’s right in front of us. From an accounting perspective, overhead, or “Sales, General and Administrative” (SG&A) expenses are any costs that are not directly connected to creating a product or delivering a service. This means pencils, pens, the electric bill, receptionist salaries and so forth. There’s more to it, though.
Overhead can creep up in expense categories you might consider to be “Cost of Service Delivery.” For example, if your MRI tech has to call a referring physician for clarification on a service order, that labor time is really overhead, even if it’s accounted for as “Cost of Service Delivery.” Keep this in mind as we move forward here.
What’s Keeping Overhead High at Your Imaging Center?
Let’s assume, for the sake of argument, that your overhead is higher than it ought to be. There is some optimal level of overhead for your imaging center, a level of SG&A that’s efficient and leads to the highest possible profitability. What’s making your overhead high like this?
It could be a lot of things, but in general, most wasted overhead spending is related to inefficient work practices. For example, if a physician refers a patient to your center for an MRI, how many manual steps must your staff complete before that service is delivered and billed? There will some unavoidable manual steps. The patient won’t get instructions by text, show up, self-sign-in using a tablet, go to the MRI room by himself and then leave without interacting with a single administrative person. (But, it’s sort of a cool idea, no?)
Rather, what often happens, especially when the order management process is not online and automated, is that your admin team has to complete numerous manual processes to ensure delivery of the service and bill for it. They will make phone calls to referring physicians to double check details. They’ll call the patient to confirm. They’ll manually enter data from a faxed-in service order into a billing system. They may not be using an IBM Selectric, but they might as well be. The core staff, the people who run the machines, may also waste their time with inefficient processes.
Overhead is also accretive in nature. Inefficiency leads to
having more staff than you really need. Each unproductive staff person adds
layers of overhead. He or she needs physical space to work in (rent and
utilities), equipment, phone service, insurance and of course, a salary. The
costs add up quickly.
Reducing Imaging Center Overhead
A strong work culture is a good first step in reducing imaging center overhead. This requires sound management and a motivated crew. After that, it’s largely about automation. The more you can get rid of cumbersome manual processes, the closer you’ll get to the optimal level of overhead.
Automated online order management, as exemplified by iOrder, gives you the ability to manage orders from multiple referring physicians with a high level of efficiency. It reduces or even completely eliminates the need for faxes, phone calls and other unproductive administrative processes. If you want to learn more about how iOrder can help you cut your imaging center’s overhead, let’s talk.