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How to Cut Costs at Your Medical Group

Analysis  |  By Christopher Cheney  
   February 21, 2023

A top RWJBarnabas Health executive shares cost-saving strategies with HealthLeaders.

An executive from RWJBarnabas Health will share his Top 20 revenue and cost-savings strategies for medical groups at a Medical Group Management Association (MGMA) conference in March.

In the current market conditions, revenue and cost-savings initiatives can be pivotal for medical groups. There are several challenges facing medical groups, including historically high inflation, workforce shortages, and tight financial and capital constraints.

Michael O'Connell, MHA, interim chief operating officer at RWJBarnabas Health Medical Group, is set to present his Top 20 revenue and cost-saving strategies at the MGMA's Medical Practice Excellence: Financial and Operations Conference, which will be held March 19 to March 21 in Orlando, Florida. RWJBarnabas Health Medical Group features about 5,000 clinicians who are associated with RWJBarnabas Health through employment, joint ventures, management services agreements, or professional services agreements.

In a recent conversation with HealthLeaders, O'Connell shared his Top 10 cost-saving strategies.

1. Development of standard work

There is significant variation in the different work that is conducted at medical groups, and the development of standard work helps reduce cost.

There needs to be standardization of work, whether it is for billing, setting standards and benchmarks for contracting, credentialling, coding, or preauthorization. The consistency helps to create good data reports and data analytics. It also helps benchmark yourself against high-performing medical groups. Creating standardized work improves efficiency, productivity, outcomes, and, ultimately, saves costs.

2. Supply chain management

Standardization in the ordering of supplies reduces costs.

A key to successful supply chain management is to make sure that you have physician partnership and physician buy-in. O'Connell worked in an organization where they had 10 different hip implants that they used for hip replacements. The costs ranged from $2,000 to $20,000, but the outcomes were the same for all of the hip implants. By working with the physicians to use only two or three hip implants, they were able to reduce costs.

Supply chain savings can be as simple as the table paper in an exam room. If the quality of the table paper is such that you must pull the table paper twice because it is thin and it rips, you are wasting money.

3. Efficient physician credentialling

When physicians join organizations, you must make sure they are credentialled and privileged in both hospitals and various managed care plans. Physicians are often brought on quickly, but then they are not credentialled so they can't see patients, or if they do see patients, they cannot get paid.

It usually takes 90 to 120 days after a contract is signed to be sure that an organization has all of the information for the physician to not only be approved on the medical staff but also approved on all of the managed care plans such as Medicare and Medicaid. If a physician starts and they are not fully credentialled, you are not going to get paid. So, there can be a tremendous amount of inefficiency in bringing providers onboard.

4. Team-based care

Medical groups can establish team-based care by making sure that each team member has the requisite skills and abilities to be able to provide care.

For example, medical assistants can support the physicians with standardization of their tasks such as preparing the patient and the chart in advance or reviewing the physician's in box. There are many opportunities to create standard work. Especially as you hire staff and train them, if you are training them for 5,000 physicians who all have different standard work, it makes it highly inefficient.

The more you can agree on standardized work for team-based care, it reduces cost in terms of efficiency.

5. Real estate management

It is relatively common for medical groups to acquire more real estate than what is needed. What ends up happening is that you have exam rooms, and if you have developed these exam rooms in such a way where they have pieces of equipment and tools that do not get used effectively, you are spending for unused real estate space.

O'Connell has found that when medical groups want to expand, sometimes they will acquire a real estate space that is not used fully. They may not be using it Monday through Friday from 8 a.m. to 5 p.m. They may not be using it on the weekends or nights. There are other strategies. For example, you can do time shares, where you can sublease a space for a day or two days a week, which is much more cost effective than renting real estate when you have unused space. You may also find that you are not using space as effectively as possible. Especially with telemedicine, you do not necessarily need to do telemedicine in exam rooms—you can do it in offices or even at home.

6. Data analytics and reports

You need to make sure that the data reports and analytics that involve time, effort, and energy are really helping to impact your medical group.

Many organizations have developed score cards and dashboards, which are meant to serve as important tools in making sure that they can manage their organizations in timely and effective ways. Sometimes, you get stale in looking at data and you are not doing anything meaningful with it. So, you need to look on at least an annual basis at the data to see what you are going to do with it. For example, if you find there are patient no-shows, are you doing anything in terms of performance improvement efforts?

You can save significant costs if you pay attention to the data.

7. Effective staff recruitment

Especially with the Great Resignation and high staff turnover, particularly in nursing, you need to make sure that you have effective staff recruitment and retention efforts.

Often when organizations are hurting for staff, hiring a warm body is something they want to do. That is not the most effective way to make sure that the individual who is coming fits the mission, vision, and goals of the organization.

Having an effective staff recruitment program, which includes peer interviewing and having candidates shadow someone in their role so they can get an idea of the culture and the job expectations, helps an organization. Reducing turnover and making sure that you recruit people who are going to stay for long periods of time definitely has cost savings.

8. Staff productivity

Whether it is someone who works in medical records or medical reception or another role, there should be expectations for productivity. You need to understand whether people are consistently working 40 hours or are getting paid overtime. You can have mechanisms to be able to do some backup staffing, so staff does not have to go into overtime. Do you have individuals who can cover staff at the end of the day or at the end of the week?

You also need to develop standards. O'Connell cites the example of a biller who went on vacation. The person who provided coverage was able to get the work done in half the time. So, you need to make sure that you have standards for productivity that are expected for staff. You need to measure and monitor productivity. You need to give feedback on a timely basis so staff know the expectations for productivity.

About 80% of budgets can be staffing, so you must make sure that staff are as productive as possible.

9. Comprehensive onboarding

O'Connell has found that people come onboard and because of the stressors of the organization they do not necessarily get the appropriate onboarding that they need to be successful in their jobs. When you look at the percentages of staff that are turning over within the first 90 days or within the first year, while they may say they are leaving for compensation or for other factors, most likely it is because they have not had the comprehensive onboarding that is needed.

O'Connell has found that successful organizations make sure people feel they are in a culture of trust and respect—that they can ask questions and that they can learn—and everything is not thrown at them all at once. Comprehensive onboarding reduces turnover and generates cost savings for the organization.

10. Optimizing scope of practice

You need to make sure that you have staff that are working at the top of their license. You do not want nurses who are doing medical assistant work. You want to deploy staff to the best of their abilities.

For example, O'Connell worked with a medical group that had a cost center, and they had five nurses in the cost center. They found out that 25% of each one of the nurse's work was non-nursing work. So, when one of the nurses left, instead of hiring another nurse, they made sure that the nurses that were there only worked on nursing work and they recruited a medical receptionist to do the other work that the nurses were doing. That saved a significant amount of money.

It is similar with advanced practice practitioners. Do you have physician assistants or nurse practitioners who are performing work that could be performed by a nurse or by a medical receptionist? You need to make sure that advanced practice practitioners are working to the top of their license and there are others who can support their work.

Related: The Exec: Expect Increased Emphasis on Reducing Costs in 2023

Christopher Cheney is the CMO editor at HealthLeaders.


Adopt standardization of work, whether it is for billing, setting standards and benchmarks for contracting, credentialling, coding, or preauthorization.

To optimize real estate, you can do time shares, where you can sublease a space for a day or two days a week.

Especially with the Great Resignation and high staff turnover, particularly in nursing, you need to make sure that you have effective staff recruitment and retention efforts.

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