Optimizing Your Medical Practice’s Cash Flow
A physician has many tools and tests to use to identify the source of a patient’s symptoms. There are stethoscopes for listening to the heart and lungs, sphygmomanometers to measure blood pressure and otoscopes to assess the ear canals. There’s also more advanced technology such as x-ray, ultrasound and testing kits for strep throat as well as other infectious diseases. All of these tools are designed to understand symptoms, identify the cause and provide a solution to relieve patient suffering. While most physicians are proficient at treating patients’ symptoms, not all are proficient at managing their practice’s cash flow. The reality is that doctors go into medicine to help people and not for their love of business and accounting procedures. Since cash flow is the life blood of a practice it’s essential to regularly review and update policies to optimize practices. To help clients, prospects and others stay updated on best practices for cash flow management, Hanson & Co has provided a summary of key information below.
Cash Flow Management Tips
- Upfront Patient Payment – Since it’s much more difficult to receive a patient payment after the time of service, it’s important for the practice to collect payment upfront. To do this the practice must obtain the patient’s insurance information prior to the appointment and research coverage essentials to understand the patient payment responsibilities for the visit and services rendered. Be sure to provide information about the type of payment methods the practice accepts including cash, check, debit or credit cards. Implementing this procedure will reduce the amount of time the practice needs to wait to receive payment.
- Confirm Insurance Coverage – It’s best practice to ensure a patient’s insurance coverage each time they schedule an appointment and visit the office. Doing so makes it possible to determine the upfront payment that needs to be made, allows staff to check on additional fees for lab and other tests and ensures no issues when the practice bills the insurance company. Keeping accurate insurance records will prevent payment delays and minimizes cash flow issues.
- Missed Appointment Fee – Missing an appointment is something that has happened to everyone. Whatever the reason, missed appointments result in missed revenue opportunities for the practice. For this reason, it’s important to clearly spell out the conditions under which a missed appointment fee will be charged to the patient. Some practices allow the patient to miss one appointment without incurring a charge while others have different policies. Whatever you decide, ensure you have a patient billing method (and corresponding agreement) on file so that if the policy is broken the patient can be automatically charged. Implementing this practice will ensure each physician’s time is properly compensated.
- Payment Plans – While these are not desired, they are a necessary part of doing business. Even patients that have excellent insurance may need to go on a payment plan to bring their account up to date. It’s essential that a practice have a formal legal document which the practice can offer the patient. It should outline the terms, interest rate (if applicable) and payment expectations. While some practices don’t like to enforce the terms of the plan because they don’t want to damage the patient relationship, it’s essential to have a policy in place to ensure the practice gets paid.
- Staffing Training – It’s important to provide training to both front and business office staff on the practice’s payment and collection policies. This will ensure they are providing accurate information to patients, getting the proper policies and agreements signed and taking the proper steps to collect patient payments. It’s also recommended that a Business Manager deal with issues of patient and insurance payment. This allows the practice’s physicians to focus on administering medical care versus worrying about payment issues.
Cash flow management is a part of business that many owners work hard to perfect. Optimizing the process is an ongoing challenge that requires regular attention and fine tuning. Following the tips provided above will give you a head start in the process. If you have questions about cash flow management or need assistance with an audit or tax issue, Hanson & Co can help. For additional information please call us at 303-388-1010 or click here for email. We look forward to speaking with you soon.