When it comes to unpaid debts, the medical industry suffers. Did you know that on average a staggering 50% of every dollar billed to a patient goes uncollected? In 2010, that meant an estimated $65 billion in uncollected revenue!
Part of this figure is made up of the uninsured, of course, but even among the insured, default rates are high. In a McKinsey survey of retail healthcare consumers, more than 74% of insured consumers were willing and able to pay out-of-pocket medical expenses of less than $1,000 a year. Yet collection rates lagged far behind these levels, even for lesser charges.
The current economic climate is likely to make matters worse, too, as average families find themselves working harder to stretch their pocketbook and employers disentangle themselves from high costs by not offering medical coverage at all or by shifting more of the financial burden to the employee. The number of uninsured patients will rise, as will the out-of-pocket expenses for those who do have coverage.
Your costs are rising, too, of course, so your practice needs to retain the maximum amount of each dollar earned. Yet collecting can be an expensive and frustrating burden. Time and money are wasted sending notices that go unpaid.
Be proactive to improve your return rate! Here are 3 tenants of a good collections strategy:
- Set Expectations.
Ensure you have written financial policies that make sense and that prioritize early payment. The first expectation should be that the customer pays at the time of service. In the event they cannot, the payment plans you offer should also be designed to collect as much as possible up front.
The policy should be posted visibly in the office and listed on all invoices. Staff members should be well educated on the policies and present them to the patient clearly as they make an appointment. Additionally, staff members need to be accountable for collecting at the point of service, and good systems should be in place to support their efforts. Until recently, many practices were unable to calculate a patient’s out-of-pocket financial responsibility until after the insurance company paid their share. But new technologies have emerged that make it possible to estimate the patient’s portion of the bill accurately in just minutes. By sharing this information with patients in advance of procedures or at the time of service, providers can minimize misunderstandings and increase the likelihood that patients will pay.
- Verify Insurance.
Is the patient’s insurance in effect? Since their last visit, patients might have lost their jobs or be transitioning jobs, be foregoing COBRA coverage to save money, or be experiencing any number of life events that could end in a loss for your practice. Having an insurance card doesn’t mean you have insurance any more than having checks means you have money, so be sure coverage is in place. You can use an online system that verifies patient eligibility in real-time as appointments are made and at check-in. If you determine coverage is no longer effective, ask if new insurance is in place. If not, this is the ideal time to discuss payment arrangements.
- Collect at the Time of Service.
Ask patients for their co-pays and their share of costs at the time of service. Patients are much more likely to pay if you request them to do so as they check in.
Unfortunately, many front-office staff members are uncomfortable requesting co-pays and outstanding balances from patients, making collections inconsistent. Employees should be committed to asking for the entire balance on the account at the time of the visit. When your practice has an established routine with written policies consistently applied, both staff members and patients are more comfortable and more likely to adhere to the policies. Point of care collections saves money on billing and helps avoid the steep drop-off in collection rates that occurs after 30 days.
It’s also a good idea to review the patient’s account and collect payment on any prior balances before additional charges are incurred. You can do this by putting copies of patient statements inside charts or using your billing software to keep front-office staff and other appointment schedulers aware.
These are just a few of the smart steps you can take to ensure your practice maintains a healthy cash flow. We’ll talk about other strategies in an upcoming post, so stay tuned!