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Is my practice overstaffed? Part 1
Some of the most common questions asked today, as practice costs rise and reimbursements decline, are, “Are we overstaffed? Are our staffing costs too high?” The fundamental productivity of your practice’s non-physician support staff can be assessed with one common ratio.
A simple percentile ratio can be derived by adding up the fully burdened annual lay support staff wages, payroll taxes and benefits, and dividing the resulting total figure by your practice’s annual collections. In a general ophthalmology practice, the typical range falls between 28% and 32%, with that much of each dollar collected going back out for lay support staffing costs. It’s likely your largest single cost of doing business.
Too low a wage/tax/benefits ratio can indicate that you have insufficient support in one or more areas of the practice. The result can be doctors who are held back from reaching their full efficiency or reimbursement claims that go unpaid for lack of billing support staff. With too few staff, burnout among the remaining staff can precipitate further staff loss, leading to critical operating deficiencies and low morale.
Spending above the upper end of this percentile range probably means your practice is unhealthy, or at least inattentive.
In this increasingly cost-conscious era, it’s still not unusual for me to evaluate practices where staffing costs exceed 35% of revenue. This is most commonly observed in fine, older practices with well-intended, long-term staff, whose doctors and managers have never adjusted to the new economic climate. Walking the halls of these practices, I’ll often find tech staff standing around waiting on call to do the next doctor’s bidding, rather than having sufficient training and supervision to simply leap in and do the next task before being asked.
This 28% to 32% normal range for general ophthalmology is adjusted up or down depending on your subspecialty:
- Retina: 18% to 25%
- Glaucoma: 25% to 32%
- Plastics: 20% to 30%
- Pediatrics: 25% to 35% (very wide-ranging based on overall practice volumes)