Is Your Practice Overstaffed?

Do you think you have too many employees? Some physicians let doubts on that question fester, sending signals to the staff that can be ruinous to morale. Here are some ways to face the issue squarely.
Jeffrey J. Denning
Contributing Editor

There are good statistics on the subject of physician office staffing. The Medical Group Management Association’s annual survey of its membership includes staff ratios for groups in most of the major specialties. It reports the number of full-time equivalent (FTE) employees per FTE physician, along with the percentage bite that office payroll takes out of collections. It’s a well-compiled survey and, while it doesn’t report regional variations, its averages can be useful. (See “How Does Your Practice Staffing Compare to These Averages?”, p. 27.)

As the numbers in the chart suggest, both a primary care discipline such as family practice and a specialty such as cardiology can be relatively staff-intensive. Staff salaries in primary care, however, usually account for a higher percentage of the amount taken in in collections than do staff salaries in subspecialty fields.

Compare your practice to the figures on the next page. But in so doing, keep one thing in mind: The trouble with averages is, they’re average. My question for you is, “Are you average?” If your practice employs more than the average number and spends more than the average portion of your collections on personnel, does that overage represent waste? It’s a judgment call that you have to make in the context of what your practice is trying to accomplish.

Our practice management consulting firm worked with an OBG group recently that employed 50 percent more non-physicians than the average. Its payroll cost was higher than average on a percentage basis, too. But the group enjoyed the status of premier group in the region; its members were market leaders, and demand and respect for the practice was extraordinary. The practice was very well run and, while not perfect, its service to patients was excellent.

At the end of the year, these doctors had very respectable paychecks; every physician in the practice was producing well above average, and the group average physician compensation was very near the average across the country. Was this group overstaffed? We weren’t prepared to tell them they were, at least not without redefining their mission.

Staff-level tests

Here are some questions you can ask yourself to evaluate your own practice’s staffing level:

  1. Are the people working here doing a good job on the work they are assigned? If they aren’t, there may be gains from upgrading your staff quality, if not quantity. That comes with training or hiring more skilled and experienced replacements.
  2. Is all the important work getting done, on time and with sufficient quality? If not, refer back to No. 1. If your people are okay but the work is piling up, you are either understaffed or you have the next problem.
  3. Is the work they are doing really necessary? Maybe there is a better way to assign the work, farm it out, or just quit doing it, that would be more efficient. If so, you may be able to cut staff or continue to grow without adding more people.

Our OBG group could. It had a significant investment in computer systems for electronic claims submissions, transcription and medical record storage and retrieval. All claims were subject to careful edits before leaving the practice, and nearly all were submitted electronically, so there was little processing of rejections by carriers later.

If your work is all necessary, getting done well, and your practice still seems overstaffed or over payroll budget when compared to the averages, you may need to review your overall “product” mix. If you’re not willing to compromise the service you are offering, then this overage is part of the cost of that decision. And if such a decision is consciously made, I can’t fault it.

If you believe your office is overstaffed, it is important to take reasoned steps to diagnose and address the problem rather than letting your concern show in offhand remarks and subliminal signals. You’d be surprised how fast messages like these can undermine morale, which is important whatever size staff you employ.

The opposite problem

Rather than being overstaffed, most ordinary practices have what is in effect the opposite problem. Their employees get C — to C+ grades, and service to patients and physicians is in that range, too. The doctors may have average overhead, but their incomes may suffer from poor productivity. When told they could do better by spending more on staff, they find it counterintuitive and resist the investment. And they stay firmly clustered around the median of achievement.

The author, a practice management consultant with Practice Performance Group in Long Beach, Calif., edits Uncommon Sense, a monthly newsletter for physicians.

How does your practice staffing compare to these averages?

Findings from a recent survey highlight average staff sizes per physician for single-specialty groups of three physicians or more. Especially in primary care, the survey confirms what doctors already know: Payroll is a big expense.