Wednesday, May 14, 2014

Improve Your Collections Percentages and Accounts Receivable: Strategies

In our work with medical practices, we know that collecting self-pay and co-insurance balances from patients ranks high as one of medical practices’ most pressing management challenges. Focusing on these accounts holds the most promise for practices hoping to improve their collection rates.

The single most important key to effective patient collections is time. The older the balance due, the less likely you’ll collect all of it. It starts at the front desk, where you’ll find it necessary to apply significant and repetitive training to get consistent co-payment and self-pay collections up front.

Put the appropriate people in key positions that ask patients to pay—not everyone is cut out for effective payment-collection. Find ways to make it clear to patients what you expect, too. If they’ve enjoyed a service-now-pay-later plan for years, you’ll have to re-train them as well.

By now you’re (perhaps painfully) aware that high deductibles and large co-pays have caused your patient balances to become the fastest-growing part of your accounts receivable. If you’ve not responded to this trend, you’ve likely seen your collection ratios dwindle in recent months.

Maybe you don’t fret over a one- or two-point decline in net collections. Think again—we’re not talking chump change, friend. A three-physician orthopedic surgical practice can easily bill out over $4 million per year. If contractual write-offs amount to 40%, your collection target would exceed $2.4 million. A 2% drop in net collections means you forfeit $48,000.00 off the top.

To achieve—or maintain—a net collection percentage in the high 90s, carefully review every step in your revenue cycle from appointment call to final account settlement and see what you can do to speed up the process. Why try to compress the timeline?
  1. People are more willing to pay while they’re sick or injured. This isn’t heartless—it’s just a fact of life. When people want or need your services, they’ll agree to your payment terms. After the fact, it becomes increasingly easier to procrastinate and hopefully forget that old balance due. 
  2. Efficient, proactive billing and collections improves public relations. Clearly communicated requirements that help patients understand what they’re getting into and honest follow-through with those requirements help patients get through the painful bill-paying process smoothly and quickly. They won’t like it, but they’ll have a better view of you without an awkward, unsatisfied bill hanging over their heads. 
  3. Fewer days in A/R increases your money’s value. While not as significant in these days of record low interest rates, uncollected A/R still represents lost opportunities for you to decrease debt, pay bills, or invest in appreciable assets.
  4. Keep these good reasons in mind as you launch into fine-tuning (or overhauling) your front-end collection process. Here are a few tips for better upfront processes:
Create a sensible chart that places your major payors in a matrix describing the general requirements of the plan and your specific requirements for patients covered by their respective plans. If necessary, make a different one for check-in and check-out that covers the tasks unique to each position. Include co-payments and limitations, examples of insurance cards, and referral and pre-certification requirements.

Train staff constantly on how to identify different plans, how to ask for money, how to obtain authorization, and how to perform all the tasks related to accurate and effective collections.

Carefully and thoroughly brief staff on updates and changes as you become aware of them.

Monitor overall rates and individual workers’ collection activity. If Susie the receptionist shows a pattern of sending patients back for their appointments without collecting the co-payment, address it with her—with examples—and educate or discipline as necessary.

Educate your patients regarding your financial policies. Revise signs, policy brochures, and telephone scripts so that you send out a consistent message: “This is what we require to provide services for you.”

If you enjoy reading the blog entries in "Solving Problems in the Medical Practice" you may want to check out all the great products at Greenbranch Publishing.

photo credit: via photopin cc

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