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Ten Ways to Reduce Overhead Costs

1. Do not use your high-priced talent for low-pay jobs. Organize schedules and procedures so office managers, associates, hygienists and nurses do not do clerical work, make appointments or do clean up. Temporary fill-in work by expensive staff is okay, but do not let it become routine.

2. Add an extra operatory, treatment room or exam room. The extra space helps with emergencies, reduces stress and adds income. To help you decide, calculate the cost to rent and equip the space, e.g. $42 per day.

3. Reduce legal costs by preparing your own contracts, legal letters or office policies. Then use an attorney to review your work. Lawyers charge a few hundred to review a contract and a few thousand to write a contract.

Modify generic forms to your practice and then clear the wordings with your lawyer. You get the added bonus of understanding every sentence in all your legal documents.

4. Eliminate overtime pay. Issue a policy that no one works overtime without your permission.

If you have this policy in place and an employee works overtime without your permission, you must pay the overtime pay. But then discipline such employees for violating office policy.

5. Put one person in charge of all purchases, including telephone plans, insurance, supplies and so on. He or she can shop for the best deals and negotiate lower prices. The final decision to make purchases or change suppliers stays with you.

Your purchaser can manage the supplies to prevent theft. He or she can save you valuable time by researching prices, features and benefits of equipment for you to consider before you buy.

As well as finding the best deals, your purchaser can work for discounts. Examples: “So if we pay your invoice within 7 days, can we get a discount of, say 3%?” “If we buy sixty instead of ten, can you give us a 10% discount?” “If we pay for six months rent in advance, can we have a 20% discount?” It never hurts to ask.

Give the office purchaser a budget for reducing routine supply costs. Consider paying a bonus when the purchaser stays under budget.

6. Reduce your accountant fees by using a retirement plan administrator, bookkeeper or payroll service. You can do your monthly financial statements in-house with a good software program. Most CPAs are happy to help you make these types of arrangements, if you ask.

7. Evaluate your equipment service contracts. In some cases, such as an older copier or complex treatment equipment, a service contract is far cheaper than paying for service calls. However, with new equipment, you often come out ahead if you or your office manager read the manual and replace the worn out parts yourself, e.g., copier drums. And because prices are so low for other types of equipment, replacing is far cheaper than repairing, e.g., computer monitors or fax machines.

8. Reduce staff turnover. Replacing one employee costs you thousands in lost production, hiring and training time and hassle. Bend over backwards to keep high producers who give you their full support.

On the other hand, keeping poor producers or destructive employees chokes your bottom line. Replace them as soon as possible.

9. If you are over 40 years old and most of your staff members are younger, ask your accountant about an age-based retirement plan.

10. Offer a cash bonus for staff suggestions that save you money or increase your income.

For example, “Each employee who submits a written suggestion to reduce our costs or increase the income will receive a $100 bonus if we use the suggestion and it works. Submit as many suggestions as you like.”