February 25, 2022
Here’s why you’re probably paying more than you should.
We talk to hundreds of aesthetic medical practice owners and operators every year and the one common thread between all of them is that their bottom-line is IMPORTANT to them. In working with both manufacturers and medical practices, we’ve also discovered several spend categories that tend to get overlooked year-after-year. This lack of attention occasionally allows for price increases and unnecessary spending that goes unnoticed. Here are MedResults’ top three business blind spots that may be costing your practice thousands!
Medical supplies. Whether you’re a family medicine physician, optometrist, or plastic surgeon, you require at least basic medical supplies for all the procedures you perform. In specialties like plastic surgery, you’ll require items, like custom packs, that may be unique to your preferences or your specialty. The fact is that as a clinician, supplies are a necessary part of your cost-of-goods. Additionally, once most practices find a manufacturer who reliably can deliver those supplies in a timely manner and at a reasonable cost, a clinician may never think twice about their supply spend again.
Here’s where you’re missing the boat!
Publicly held medical supply manufacturers and distributors have shareholders with very specific revenue expectations year after year. As a result, medical supply pricing may fluctuate annually, and not in your favor. Furthermore, most distributors and manufacturers allow their reps to have pricing autonomy, especially across different markets. Mark-ups can vary widely between states, cities, and even neighboring practices depending on relationships or total volume, and especially if your rep does the purchasing (or ‘order-taking’) for your practice. As a best practice, medical businesses should perform a cost-analysis with their primary distributor and their competitors every year. Switching suppliers is never an easy feat for a busy practice, but by revisiting this spend category routinely, you can proactively catch a price increase and determine whether the savings through another supplier justifies the switch. Keep in mind that we’re not accounting for supply and demand, and we all know how important this is, but understanding what you’re paying and WHY is critical. Consider this, if you had the same relationship for five years and found out that you could have saved $50,000 annually by switching suppliers (or renegotiating), would you consider a change? What could you do with an extra $250,000?
Merchant Processing. Much like a cellular bill, credit card processing statements are confusing and therefore, the perfect place to hide fees that nobody will catch! We hosted a few webinars in 2021 which focused solely on three red flags that you should look for on your credit card statements. It was shocking to see how easily additional fees could be hidden so cleanly in a statement, not to mention the amount of money one could be paying toward bogus charges! Here’s a quick tip we learned from our expert in transparent merchant processing, Joe Kraljev, Founders of Members Only Processing. Review your statements and look for line items that are listed as “Qualified”, “Mid Qualified”, or “Non Qualified”. These are typically bundled fees that allow a provider to increase rates without any transparency about which types of cards were accepted. For two more tips and examples to help you review your credit card statements, watch this quick video! By taking a few minutes monthly to review your statements, you could save hundreds if not thousands of dollars monthly!
Medical Malpractice and Professional Liability Insurance. Did you know that roughly 20,000 malpractice lawsuits are filed every year in the U.S. (a statistic from 2021) and that these lawsuits from medical errors cost approximately $20 billion a year1? That’s across all specialties, but the numbers are certainly alarming and should cause extra concern regarding the protection of your business. We’ve learned from our insurance partners that there are a few key things to consider when selecting the right policy for your practice (or reviewing your existing polic(ies).
Statute of Limitations: First, it’s a misconception that your statute of limitations is limited to any number of years after an incident. For example, in Florida, the statute of limitations for filing a medical malpractice lawsuit is two years from the discovery of the incident. However, discovery means obtaining the initial information that medical malpractice took place, even if the incident occurred 10 years ago! In this situation, it’s a best practice to review your policy to determine whether you have “tail” coverage if you cancel your insurance policy.
Tail Coverage: No, this doesn’t cover the back half of our four-legged friends. Tail coverage or “tail insurance” extends coverage for incidents that happened during the time you had your policy, but a claim was not filed until after your policy expired or was canceled. This is very important for a medical practice for a number of reasons. If you purchase tail insurance, you have a defense against claims that come back to you, regardless of whether they are legitimate. Without this addition to your policy, you don’t have coverage for the patient or defense against a specific claim. Imagine being named in a lawsuit for an incident that occurred 10 years prior – even if you weren’t directly involved, you’d still be out of pocket for attorney fees to defend yourself! Have you checked to see if you have tail coverage?
Standard Limits: Let’s consider Florida as the example. Florida has a Standard Limit of $250,000 per claim and $750,000 in annual aggregate claims. However, if you have an ‘underwhelming’ policy (aka: a really bad policy), there a possibility that your defense [against a claim] shares in the limit, which means for a $250,000 claim, your attorney’s fees and the award you have to pay would come out of the $250,000 (trust us…attorney’s fees may take up the entire amount). Check your current policy to determine whether you have “defense outside of the limit” so that you know exactly how much your policy will cover in event of a claim.
Finally, this brings us to the last key element of a policy…
Uncovered Reward Judgement: Assume you choose not to carry insurance (which some states allow). If you have an uncovered reward judgement, this essentially means a claim has been filed, the judgement is against you, and even worse…you can’t pay it. In this scenario, you’ll likely lose your medical license. Are you willing to risk your entire business (and future business) over the cost of an annual insurance policy?
The moral of the story here is that insurance is the #1 overlooked, but most important Business Blind Spot in most practices. Furthermore, if not reviewed regularly, your lack of coverage or the correct coverage for your business can cost you hundreds of thousands (or perhaps everything) in the future.
Curious as to how MedResults can help you wipe out costs in your practice? Contact us today!
Jamie Adkins, COO of MedResults Network | firstname.lastname@example.org