by Mary Pat Whaley http://www.managemypractice.com/
Operating expenses fall into two categories: fixed and variable. Your fixed expenses are the same from month to month regardless of whether you are seeing patients or not. Your variable expenses change from month to month based on the volume of business you do and what is needed to support that volume of business. Purchases that fall under the operating expense category are less than a pre-determined amount – maybe less than $500 in a practice or less than $1000 in a hospital. Any purchase over that amount will be a capital expense (defined as having a usable life of more than one year) and will appear on your monthly expense statement as depreciation.
Fixed Expenses
- Rent/Mortgage
- Utilities: electricity, water, garbage, cable, alarm system
- Janitorial and Groundskeeping
- Computer System: monthly maintenance
- Phones: monthly maintenance
- Leases: copiers, transcription equipment, some medical equipment
- Malpractice Insurance
- Other Insurance: general, business interruption, directors & officers, umbrella
- Depreciation
Variable Expenses – Typically when you are looking at reducing expenses, you will look first at your variable expenses, seeing what you can cut down on or eliminate, or what you can renegotiate.
- Payroll: staff wages, tax match, retirement plan match, bonuses, annual raises
- Benefits: health insurance, life insurance, dental insurance, vision insurance, disability (long term, short-term), worker’s compensation, unemployment
- Computer System: additional licenses, charges for claims, statements, eligibility
- Phones: repair, new lines, new jacks, voice mail changes, cell phone plans, pager plans, answering service, Yellow Pages (hopefully minimal),
- Inside: pest service, plant service
- Medical equipment: small instruments, exam room lamps, Mayo trays
- Laundry: gowns, sheets, towels, shorts, lab coats
- Consumables: (medical – built-in to the price of the service) table paper, syringes, x-ray film, lab supplies
- Consumables: (medical – charged separately to the patient) allergy serum, durable medical equipment
- Consumables: (office) copy paper, toner, kitchen and bathroom supplies, pens
- Printing: encounter forms, appointment cards, Rx pads
- Education: (staff) continuing education, license renewal, CPR, coding updates, dues, subscriptions
- Perks: uniform allowance, parking, lunches, holiday parties, birthday gifts
- Purchased Services: transcription, radiology over-read, accountant, lawyer, consultant, auditor, inspector, outsourced billing, collection agencies
- Marketing: advertising (print, TV, radio, direct), sponsorship of events, meet & greet with referrers, holiday gifts, website
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