Improving Your Practice's Financial Performance
February 24, 2015
Medical and dental professionals operating private practices should regularly review their practice’s financial health. Because of changes in health care, including more high-deductible health plans, higher out-of-pocket costs for patients and changes in reimbursement rates from insurance companies and Medicare/Medicaid, maintaining a healthy practice is becoming more difficult. Consider these strategies to keep your practice’s financial health in check.
Establish Patient Financial Policies
Having a patient financial policy can help improve a practices financial health. The policy should be easy to understand by patients and office staff. If a practice already has a policy in place and is struggling with receiving payments from patients, it may be time to review it.
A basic policy should clearly detail how payment is expected to be made for services. If a patient is using insurance, their eligibility needs to be checked before every appointment, and any co-pays should be collected at the time of service.
Each patient should be given the financial policy at the time of service, asked to sign it, provided with the signed copy and a copy should be included in their medical records or chart. The financial policy should also be posted on the practices’ website for easy reference.
Items to include in the patient financial policy may include the following:
Copays are due at the time of service
Outstanding patient balances will be requested at the time of the next service
Patients unable to make copayments during their visit will be re-scheduled
Extra costs incurred to collect balances due, for example, collection agency fees, will be added to the patients existing balance
Depending on the practice, the policy may include refusal to treat patients if payment or partial payment can’t be made
Include all policies on the practice’s website, verbally communicate the policy at the time the appointment is booked and email the patient the policies and what to expect from their first visit, prior to their visit. Making policies readily available can help patients avoid “surprise” payments.
Offer Easy Payment Methods
By offering several easy payment options, physicians can increase the financial performance of their practice and positively affect the practice’s collection ratio. Payment methods can include online and in-person acceptance of credit cards, debit cards or check, and accepting cash by mail or at the clinic. Using an experienced merchant services
provider, like Peoples Bank, that offers competitive rates and low fees to process credit and debit card payments can make the payment process easier. Additionally, consider offering an incentive discount for full and complete payment on larger bills and within a certain time frame.
Monitor Accounts Receivable
Receiving payment for all or the majority of invoices sent to a patient or insurance company is a good indicator of a healthy practice. Accounts receivable or AR, is the total money owed to a practice for services provided that have not been collected or paid. A billable service or sale is treated as an account receivable after the patient or insurance company has been sent an invoice. An AR is considered an asset on the practice’s balance sheet, which can help determine the practice’s income. Not all money owed in AR are collected on time, and some aren’t collected at all.
Having AR collection procedures can help a practice receive more payments on time. Procedures could include the number of times you contact the patient by phone and or mail to ask for payment, and when to send the debt and patient to collections. Review AR daily and educate staff of outstanding balances to help them collect payment if they are involved with payment collection.
Establishing patient financial policies, offering easy payment options and monitoring accounts receivable are examples of strategies medical and dental professionals can use to improve a practice’s financial performance. Recognizing how to measure a practice’s financial health and creating systems to improve payment collection can help a physician streamline and efficiently run their practice.
The information provided in this article is general guidance based on industry best practices. While Peoples Bank staff can give expert advice on the financial products and services we offer to professional practices, the information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," and without warranty of any kind, express or implied. Member FDIC.