Don’t cut staff without considering revenue implication

As you undertake budgeting and planning for the coming year — which we presume (and urge) you do — remember that cutting staff usually hinders revenue growth as it saves overhead cost.

Some other kind of business might respond well to a round of layoffs and staff cutbacks, but your practice probably won’t. The reason is simple: Productive physicians generate more revenue. And time and again physicians and managers tell us that a full staff makes that possible.

Cutting staff, in my opinion, is the last thing a practice should do (unless of course there really are too many employees around!). Unfortunately, that’s the first thing a practice thinks of in tough times. Cutting overhead is such an easy target as we all know.

So keep that in mind as you plan for 2008. In responding to tough times, don’t approve a plan that will probably pare revenue without planning for that income loss.