Interest rates have been low over the past many years, which has been most advantageous for utilizing adjustable rate loans. Experts say that interest rates will be on the rise this year – an easy prediction given where rates are currently; how can you go wrong? A better prediction would encompass how quickly the interest rates will they rise? I figure why take a chance; why wait?
Peter Drucker, who was known for his leadership in the development of management education, once said, “Work implies not only that somebody is supposed to do the job, but also accountability, a deadline and, finally, the measurement of results —that is, feedback from results on the work and on the planning process itself.” If you wish to manage your business effectively, it is important to establish measurements or benchmarks for the purpose of creating accountability for your company and to determine if you are meeting the overall objectives of your business strategic planning. The measurements you define will also help your employees more clearly identify with your goals as well as provide you with an assessment tool for evaluating performance of your team.
The number of patients with high-deductible commercial plans continues to grow. The costs of health insurance premiums are on the rise, which means that employers are likely to eliminate other employee benefits, such as dental benefits.
It’s a fact; your patients have to pay more today for their healthcare than ever before. Since 2006 your patients have experienced an 88% increase in their commercial deductible amounts and since 2002 the percentage of practice receipts that are derived from patient payments have increased – going from just over 10% to more than 30% today. I recently saw a quote in Medical Economics that read, “What you collect from insurance companies covers your overhead. What you collect from patients goes to your bottom line.”
What business priorities must a practice make today to stay on the path of financial health? I recommend that you take action on the following five practice management strategies:
- Focus on the process of patient collections – Create a mapped out plan as it relates to the workflow at the front desk, patient check-in, and the patient checkout process. Your front desk team members are the lynchpin to keeping your collection process rolling. Be sure each staff member, full-time and part-time, is educated on your billing process and clearly understands their role in the process of patient collections.
- Review your systems used for patient collections – Dust off and review your current Financial Policy to ensure that your policies clearly outline your process for billing and collections. Because today’s patients are paying more out-of-pocket, they are becoming more involved in their choices for how they receive their care and from whom they receive it. Your Financial Policy should be crafted in a way to effectively collect your fees and market your services at the same time by conveying a sense of value.
- Offer financial arrangements – I recommend that you have a written Financial Arrangement with your patient. This document would outline the costs of your services, potential discounts, the estimated patient responsibility, and the patient’s agreement to the method of payment. Introducing this document and going over it with your patient during the initial registration of a new patient or during the check-in and checkout of an established patient might be a shift in your business process, but it will assist you in your collection efforts. Studies have shown that only 21% of patient balances not paid up front are ever collected. Having a pre-planned financial arrangement is critical to maintaining a financial healthy practice. You just can’t cut business costs enough to make up for the lost revenue caused by ineffective patient collections.
- Check insurance eligibility and benefits upfront – Determining your patient’s responsibility at the time of service or at the time of scheduling using technology that is readily available today is mission critical. This starts with determining their eligible benefits and then drilling down to estimate their out-of-pocket costs. Taking this step will do a few things for you and your patient. It will assist you in obtaining copays and deductibles upfront. It will eliminate the delay of receiving insurance claim denials, which cause unpaid patient balances, and, it will benefit your patient by removing the anxiety of not knowing what their cost will be. By being proactive in this process you will increase your patient collections and will improve patient satisfaction.
- Establish a payment card on file program – To optimize your collections you should establish a payment card on file program, which will accelerate collections and improve your cash flow. However, keep this important factor in mind – this process should only be implemented using a system that will comply with Payment Card Industry (PCI) regulations and billing standards. I recently met with a doctor who said to me, “Oh, yes, I do this already. My front office staff member is collecting the credit card information and charging the patients’ card each month.” He had no idea that this was a breach of the regulations, as you are not allowed to maintain credit card numbers in your office or on your computers. Establishing an effective payment card program starts with using the right technology and managing your merchant service costs. To view a demonstration that I recorded for physicians and dentists interested in this process click here. The positive results of implementing this in your office include improved collections, improved cash flow, elimination of sending out statements, faster check-in and check-out process, and reduced staffing costs spent on collection efforts.
A doctor’s office must be diligent in their business efforts of billing and collecting outstanding balances from their patients – it’s the difference between having a profitable or unprofitable business. If you would like assistance with reviewing your financial policies, your accounts receivable, or implementing a new collection process in your office, you can request additional information here.
Mike DeVries is a CERTIFIED FINANCIAL PLANNER ™, Enrolled Agent, and a Certified Healthcare Business Consultant focusing on helping healthcare professionals. If you would like to learn more about becoming a client, contact Mike at www.vmde.com
The following is a recording of a live Webinar presented in cooperation with Jackie Coult, CHBC of Complete Healthcare Business Consulting. Our topic was Physician Quality Reporting System and helping doctors avoid the 2015 potential reimbursement penalty by taking action before the end of the year.