Editor's note: This is Part 12 of a 12-part series focused on optimizing medical group financial performance. Each brief in this series takes 2 to 3 minutes to read and identifies specific actions medical groups can take to achieve sustainable financial improvements.
Assessment
Beyond clinical operating costs, every medical group should actively manage administrative and support function expenses. These include organizational leadership, RCM, information technology, accounting and reporting, marketing, materials management, and facilities management.
Each organization should establish a target cap for overhead expenses as a percentage of total revenue and then segment this percentage by function. Function leaders must be held accountable for managing resources within their designated targets. The financial opportunity for overhead cost reduction is determined by comparing current cost-to-revenue ratios for administrative functions against the established targets.
