“Only 21% of patient balances that aren’t collected at the point-of-service are ever collected”
Operating an efficient and profitable medical practice is about more than seeing lots of patients and having a reputation for quality care. On the contrary, most success in medical practice comes from effective billing and collections procedures. Any practice can have hundreds of patients, but if you aren’t efficiently collecting reimbursements for those patient visits, then it will be a challenge for your practice to profit – and that could severely limit its longevity. This blog post will provide you with three best practices to help improve your collections and cash flow processes. Implementing the cash flow method of accounting is a great way to ensure that you’re reimbursed for your patient visits.
#1 Keep Accurate Data on Aging Accounts Receivable
As a practice, you can’t simply ignore accounts receivable that have been on the books too long. Yes, the fees associated with turning an account over to collections are high, and non-payment can definitely create some difficulty in the future relationship between your practice and its patients, but ultimately, it comes down to working the math so the practice can remain open and profitable. Eventually, those accounts will need to be turned over to collections to give your practice the best chance of recouping the fees it’s owed. With every passing day after a bill is issued, the likelihood of the practice receiving payment for rendered services decreases. After about six months, that likelihood decreases even further, and can be as low as 30 percent! Keeping accurate records on aging accounts is vital, as it will help your practice determine when it is appropriate to either write them off as bad debt, or turn them over to collections.
#2: Commit to High Standards in Your Accounting Processes
Top-performing medical practices generally do two things better than most. First, they collect more of what they’re owed. This may sound simple, but it doesn’t just mean they collect more from each individual patient – they reconcile more of their total accounts, as well. Second, they also collect on accounts much faster than other practices. Again, this may seem minor, but as stated previously, the longer an account sits in A/R, the less likely the practice is to be reimbursed. Practices that collect quickly will naturally recoup more of their total reimbursements. We’ll talk more about that in #3…3 Looking to improve billing efficiency? Learn how cash flow accounting can help boost profitability for your medical practice - http://bit.ly/2niiLSw Click To Tweet
#3: Focus on Current Collections vs. Collecting Older Accounts
Since reimbursement becomes less and less likely over time, your billing department should focus more on collecting accounts currently in A/R than those that have been in receivable status for an extended period of time. Spending too much time on these older accounts is not only an inefficient use of staff time, but it can also be a money drain. The reason for this inefficiency is that focusing on old accounts takes attention away from current accounts, which are more likely to be paid. Although it seems counter-intuitive, using this approach will produce greater results for your medical practice in the long run. Implementing new billing guidelines and re-training billing staff is a great first step to support this effort.
For more tips medical on billing performance check out our eBooks on the topic:
How to Improve Profitability for Your Medical Practice
The fundamental goal of any medical practice is naturally to treat illnesses and to help people. Beyond this though a practice must be able to keep its lights on and its staff paid.Download Now