Are you being penny wise and pound foolish?

Are you being penny wise and pound foolish?

The idiom “penny wise and pound foolish” is used in two ways. One is to describe a person who is stingy with small sums of money but extravagant with larger ones. Think of someone you know who drives their $70,000 car 25 miles across town to save 10¢ per gallon on gas. The phrase is more commonly used to reference the act of scrimping on a purchase only to have that tactic backfire down the road. This would be the person who buys cute but cheap and poorly made clothes and then spends more money shopping for more clothes because most of what they buy falls apart before the end of the season.

In a medical practice, being penny wise and pound foolish is an ever-present danger, given ever-increasing overhead expenses coupled with stagnant (at best) reimbursement for services provided. There are times when an office can get by with less than the best, but it’s important to evaluate purchases of goods and services carefully so that you’re always getting the most for your money.

Always take advantage of discount coupons and free shipping offers, but resist the urge to cut corners by buying low-quality supplies. There are plenty of bargain items out there – everything from cleaning supplies to office furniture – but in many cases, you really do get what you pay for. Decide where you can get by with low-cost and off-brand products, and where you need to step up and pay for the highest quality you can afford.

Equipment upkeep is an area where it’s easy to slip into cutting corners, but just like having your car serviced regularly, investing in preventive maintenance on computers, copiers, and medical devices will save money in the long run, not to mention help you avoid downtime and frustration when equipment breaks down and disrupts patient care. Create an equipment maintenance schedule and stick to it.

When evaluating proposals for services such as office cleaning, lawn care, and computer maintenance, going with the lowest bidder is not always the best choice. Compare carefully and check references before hiring an outside vendor to provide services such as these for your practice. The same goes for occasional contract work such as painting, flooring installation, and building repairs. Check Angie’s List if it’s widely used in your area and ask nearby colleagues for recommendations.

The staff of a medical practice is a valuable asset. Trying to save money by not offering competitive wages and rarely giving pay increases falls into the penny wise, pound foolish category. Paying an extra dollar or two an hour is a smart move if you want to keep your turnover rate low, have employees who feel valued, and maintain a high level of productivity. If individuals resign and cite low pay as the reason, it’s time to reevaluate your salary strategy.

When considering ways to save money, don’t forget to factor in time. For example, you might be able to save a few dollars by purchasing supplies at a big box store, but if that means sending two staff members half-way across town to do the shopping, how much are you really saving?