Content Dam Diq Online Articles 2015 11 High Overhead Thumb
Content Dam Diq Online Articles 2015 11 High Overhead Thumb
Content Dam Diq Online Articles 2015 11 High Overhead Thumb
Content Dam Diq Online Articles 2015 11 High Overhead Thumb
Content Dam Diq Online Articles 2015 11 High Overhead Thumb

Data bites: 6 ways to get overhead under control

Nov. 2, 2015
It takes money to make money, goes the old saying. But is high overhead taking too big a bite out of your profit? These six steps can help.
Sorry—fresh-smelling toilets do nothing to lower your overhead.

Editor's note: This article first appeared in the Apex360 e-newsletter. Receive your free subscription here.

It takes money to make money, goes the old saying. But is high overhead taking too big a bite out of your profit?

Using data from the ADA and Bureau of Labor Statistics, along with proprietary sources, our analysis found the median overhead for general practices was 75%. This is extremely high. We teach our GP clients to aim for 59% overhead.

Steps you can take to control overhead
Practices should be vigilant about reducing operating costs as a way to cut overhead. Here are six areas you should assess for potential cost savings:

  1. Purchasing: Evaluate procedures for purchasing supplies. Are you bulk ordering items that you now use less frequently?
  2. Facility: Renegotiate lease terms or, if you own your facility, explore refinancing options. Currently, interest rates are at a historic low.
  3. Insurance: Work with your insurance agent to review coverages and premiums for potential savings.
  4. Utilities: Reexamine utility costs, especially for Internet and telecom. Providers usually offer different options and packages that can result in savings.
  5. Inventory: Take inventory every six months to avoid overages and shortages.
  6. Compensation: Consider implementing a staff bonus system based on increased production and collections in place of annual cost-of-living raises.

Every expense category should be reviewed regularly to ensure that the practice is receiving the proper value for what it spends.

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