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
