Sustaining profitability in a physician’s practice today is a growing challenge, and a positive cash flow is critical. With profit margins soft, it is vital that the practices have an effective comprehensive strategy for prompt and accurate collections for services. Evolving marketplace trends continue to exert increasing stress on practice collection methodologies and ultimately profitability.
Challenges in Review:
1) Continuing cuts in physician reimbursements — not new, but growing ever more painful.
2) Proliferation of high deductible health plans (HDHPs) and consumer driven health plans (CDHPs) which often combine high deductibles and out-of-pocket expenses.
3) Escalating numbers of uninsured (self-pay) patients. The result: ever-increasing fees coming directly from patients necessitating the practice revamp point of service (POS) collection tactics.
Physicians who traditionally provided care to many patients, regardless of their ability to pay, now find it increasingly difficult to continue no-pay services. A case in point: When physicians provide patient care, they incur operating expenses (overhead) which, like any business, must be paid. That said the cumulative financial affects of diminishing reimbursements, serving rising numbers of patients with HDHPs, CDHPs, and those with no insurance coverage, places additional pressure on practice profits. POS collections represent high dollar amounts, directly impact practice cash flow, and ultimately physician incomes. Successfully adapting to a changing environment, while never easy, is a hallmark of winning teams.
With little control over government price controls and fading reimbursement levels, physicians will need to look internally for cash flow enhancement gains. A good starting point: strict collection policies and efficient procedures designed to maximize accurate collections and reduce payment delays. For the practice, managing patient collections successfully (capturing all revenues for services provided) and maintaining positive cash flow, involves far more than submitting a claim to the patient’s insurance carriers (primary and secondary), waiting for payment, and collecting co-payments. Efficiently dealing with the complexities of patient collections is paramount and requires an action plan.
Key plan elements will include:
• Skilled staff with ongoing training
• Access to advanced technology systems
• Effective operational management
• A commitment to working smarter. Adhering to business basics is really not that difficult, and the results can clearly be rewarding.
The growing shift to POS collections has, for many practices, promoted an integrated business office model: Orchestrating a coordinated effort between insurance and front office staff to collect 100% of co-payments. Most practices do this effectively. However, with many of the new plans, a growing number of patients don’t owe any co-payments but rather the first $2,500 or more. Not surprising, this is appealing to purchasers, until payment is required. Many of these plans, as a marketing tool, have introduced high and variable deductibles, and steep co-insurance as a method to cap premium increases. Practices have responded by moving patient collections to the checkout area where the allowed amount can be determined.
The key hurdle is determining the patients’ allowable fees which many payers mask to their advantage. This team approach is a rational management answer to address the spreading growth of the new insurance plans with confusing coverage limits for patients and practice staff, thresholds, and growing administrative requirements. Simply, the practice is forced to absorb even more responsibilities previously provided by the insurance companies.
A few examples are: 1) accessing accurate payments, 2) monitoring coverage limits, 2) obtaining gate keeper authorizations, 3) providing patient education regarding their insurance coverage, and 3) keeping practice staff with timely updates. An added frustration is that many patients obtaining less costly coverage rates are reluctant to meet financial (out-of-pocket) obligations associated with the required deductibles and co-insurance plans. These changes result in the practice having to explain to patients their payment responsibilities, filling out additional forms, more telephone calls and wait times, and mailing additional statements and collection letters. All of these ensuing tasks demands more staff support time and basically represents additional practice operating expenses. Each practice absorbs these costs as part of doing business but it dilutes net profits. Unfortunately, there is no quick remedy, and the true cost of collections continues to rise.
Some suggestions:
1. Establish better practices, payments, policies and guidelines.
2. Policies are clearly articulated by informed and trained staff accenting effective communications and interpersonal skills. This is difficult but not impossible!
3. Highlight the payment policy in current patient information brochures, office waiting area signage, practice auto attendant messaging and automated patient appointment scheduling system messaging (any confirmation of pending patient appointments).
4. Have patients download forms and payments data from the practice’s website.
5. Policies reinforced by the physician team. Show the physicians the impact on cash flow if 30-40% of patients shift to these new plans.
4. Verify unpaid balances and deductible statuses.
5. Increase accepting credit or debit cards for payment, and deposit scanning software.
6. Pay attention to details, monitor, and always follow up.
7. Offer discounts to self-paying patients. Considering the actual expense of billing for services, giving patients a 20% discount helps both sides.
8. Be respectful and understanding of patient concerns and smile…it works.
9. Take your time and answer patient questions.
10. Practice payment policy message (example): “At the time of your visit, please be prepared to pay your co-payments, co- insurance and any unpaid deductible required by your insurance carrier.”
11. Front office responsibilities for patients telephoning for appointments should include:
• Asking the patient the amount of the deductible in their current insurance program and how to verify.
• Advising patients to expect to take care of practice charges up to the full amount of their annual deductible.
• Verifying the amount due as well as any previous balance.
• Reminding patients that their payments can be made by cash, credit card, or check.
For most of us, change is difficult and not easily managed. Successful practices will continue to adjust to the new challenges by implementing more efficient processes and ensuring a better skilled workforce. The old adage remains true: the only real constant is change.
