Healthcare practice cost cuts made without solid benchmarking data often backfire, according to Shawntea Gordon, CEO of Atlas & Perpetua Healthcare Consulting.
Costs rise quickly.
Why practices feel the pressure to cut
Gordon told Keith Reynolds, Managing Editor of Physicians Practice, that the gap between expenses and reimbursements has widened sharply. Staffing shortages, rising prices for medical supplies, and a technology stack that can swell from a few core systems to as many as fifteen in some organizations all contribute to tighter margins.
When the arithmetic becomes tight, the reflex is to slash costs. But Gordon warns that a cut made without data behind it is essentially a guess, and the wrong guess costs more than it saves.
Common money leaks in practices
The consultant identified several recurring sources of lost revenue. Front‑desk data entry errors, coordination‑of‑benefits problems, uncaptured patient responsibility, undocumented in‑office services, unappealed denials, and downcoding all drain practice finances. The leak she sees most often is unmanaged denials and claims that sit idle in accounts receivable.
She advises a first step for any practice that has never benchmarked: pull the past twelve months of invoices, compare what was ordered to what was paid, and then explore alternatives and group‑purchasing contracts.
Choosing reliable benchmarks
Not every benchmark is trustworthy. Gordon stresses the need to separate established associations from groups that merely claim validation. An apples‑to‑apples comparison starts with an honest read of a practice’s own size, location, service mix, and payer mix.
Before any staffing reduction, she recommends a “right‑sizing test.” Practices should pull administrative and clinical support ratios against validated benchmarks. Often, groups convinced that staffing is their biggest cost are already understaffed, leading to burnout that caps collections.
Related: User Blocked from Online Service
In the broader picture, the trend toward electronic records has left some offices still paying for paper‑shredding services that never get used, a contract many never reread. Such lingering expenses illustrate how legacy arrangements can persist unnoticed.
Framework for sustainable improvement
Gordon outlines a four‑question checklist before any systemic change. One case involved a practice that switched medical‑supply vendors and lost access to a surgical item that was chronically backordered, highlighting the risk of poorly vetted cuts.
She proposes a holistic review followed by a 90‑day improvement plan. The plan should convert the same monthly block of time into continuous improvement, aiming for a modest 1 % improvement each month rather than a dramatic annual overhaul.
One practical tip she offers for Monday mornings is to run a monthly report comparing the CPT codes billed against the codes reimbursed. Every variance signals a possible downcode that should be investigated.
While the data‑driven approach sounds straightforward, implementing it can be tricky. Practices must balance the need for quick fixes with the discipline of ongoing monitoring, a tension that often leads to half‑hearted efforts. The result is a patchwork of measures that fail to address the underlying financial drift.
What to watch for going forward
Reimbursement rates have not kept pace with the rising cost of staff, supplies, and technology. Without a clear view of where money leaks occur, practices risk making cuts that undermine patient care or create new compliance risks.
According to the interview, the most reliable way to avoid costly missteps is to anchor decisions in a practice’s own historical data and validated industry benchmarks. By doing so, administrators can identify true high‑cost areas and target reductions where they will have the greatest impact.
