A growing number of chiropractors seeking ways to spend more time on professional matters and less time on administrative duties are turning to employee “leasing.” This alternative to traditional staffing has the potential to reduce the time and cost of employee administration and can reduce recruitment time, employee turnover and benefits planning.
Due to economies of scale, employee leasing firms generally can purchase “big company” benefits for medical practices at a lower cost than practices can get on their own. Effective employee leasing can benefit doctors, because of reduced costs, greater administrative efficiency and reduced liability; and employees, because of potentially better benefits, according to “Medical Practice Trends,” by Tony L. Sullivan, copyright 1996 by Williams and Wilkins
The business side of chiropractic is undergoing fundamental changes in human-resource management, and the professional employer organization (PEO) industry is one response to market demands. There are three factors driving growth of the industry. First, over the last two decades, there’s been a significant increase in employment-related federal, state, and local laws and regulations. Second, the expertise required to manage a small to mid-sized business has outgrown the experience and training of many office staffs. Third, with unemployment at an all-time low, working Americans are demanding quality healthcare, retirement savings plans, and other employee benefits for themselves and their families.
In response to these demands, the PEO industry evolved from the need for small businesses to achieve economies scale, and to help divide the “business of business” into manageable parts.
What PEOs Do
PEOs strive to offer their clients and worksite employees the services and expertise of a personnel department within a large corporation. Few small businesses can afford a full-time staff consisting of an accountant, a human resources professional, a lawyer, a risk manager, a benefits manager and a manager of information services. PEOs can assist chiropractic offices that need help managing increasingly complex employee-related matters such as personnel management, health benefits, workers’ compensation claims, payroll, payroll tax compliance, and unemployment insurance claims.
The average cost to perform these types of administrative duties in-house is anywhere from 6% to 12% of your bottom line. A PEO can usually do the same for as little as 2% to 4%, plus it frees up your office staff to concentrate on activities that make you money – such as increasing collections, marketing, patient education and inventory issues.
By providing these services, professional employer organizations can give you more freedom to concentrate on your business, with fewer distractions associated with the business of employment. Costs related to the monitoring of, and compliance with, employment laws may also be reduced.
Areas of Emphasis
Let’s look at two of the biggest areas in which PEOs can provide services to chiropractors:
- When you became a doctor of chiropractic and started your practice, you became keenly aware that the federal, state and local governments made you an employer, too. In doing so, the government made you responsible for numerous rules and regulations that must be followed. In a traditional employment arrangement, you must devote a portion of your staff’s time to administrative tasks related to these requirements.
A PEO allows you to refocus your staff’s time on increasing your bottom line by outsourcing your non-revenue producing activities.
- Another area in which a PEO could save you money is by potentially reducing turnover and attracting better employees. The time and money to train an employee can be substantial, and with today’s bullish job market, extra incentives can only help in attracting and keeping top-notch employees.
A PEO can help you offer benefits that you may have thought of as too cost-restrictive. The PEO can offer employee benefits such as health insurance, disability and retirement; enhanced employer/employee communications; accurate and on-time payroll; professional orientation and an employee handbook; up-to-date information on labor regulations; and efficient and responsive claims-processing. PEOs can increase your ability to attract and keep valued staff members.
Keeping It Simple
The employee-leasing concept is simple. The chiropractic office and leasing company become co-employers of the practice’s staff. You can spend your time on revenue-generating activities, while the leasing company relieves you of the time and expense of tasks such as payroll preparation and distribution, hiring and firing, W-2 form preparation, federal and state withholding tax computations and filing, and workers’ compensation claim administration. This set-up can also provide financial and administrative benefits for the practice, enabling employees to receive better benefits, which in turn, can increase staff loyalty and reduce turnover.
The employee-leasing concept is applicable for both single-doctor and multiple-doctor practices. The leasing concept is flexible and can be molded to fit a practice’s needs. Many chiropractors will find that the personnel services an employee leasing company provides will give them additional time to address the efficiency of their practices and to focus on providing care for their patients.