Keep your patient collections healthy

April 25, 2011

As an independent practice owner, your revenues, and therefore your livelihood, come almost exclusively from insurance reimbursements and direct payment from your patients.

Key Points

As an independent practice owner, your revenues, and therefore your livelihood, come almost exclusively from insurance reimbursements and direct payment from your patients. This article focuses on your patients, which, according to the Medical Group Management Association and other data gathering groups such as the National Society of Certified Healthcare Business Consultants, probably represents 25% of your receipts-and growing.

Group health insurance costs continue to increase steadily, leading employers to use many tactics to try to lower costs. These include increasing employees' share of premiums, reducing benefits, raising deductibles, offering only health savings accounts, using health maintenance organizations, or dropping group health insurance coverage completely. The result is that patients are paying more out of their own pockets-if they have coverage at all-and they are not happy about it.

In addition, high rates of unemployment and job turnover and compensation freezes are increasing patient receivables as a percentage of the practice's total receivables. Since most physicians are focused on patient care, they delegate patient collections to staff. So maximizing your practice's receipts requires having not just the right policies and procedures in place, but the right staff for carrying them out.

Your practice's first line of defense against a reduction in practice income sits at the front desk. Proper procedures, financial policies, and staff training are keys to securing consistent practice receipts and maintaining, and even improving, cash flow. Focus areas for staff are: attitude, expectations, consistent application of procedure, focus on copay and patient balances, and insurance status verification.

In addition, consistent patient statement mailings, effective and timely line-item transfers of payer responsibility status, and implementation of telephone contact follow-up and collection due diligence using tactics such as payment plans will improve collection performance. But nothing beats the opportunity to collect from patients when they are standing at the front desk. All of this starts with the development of a financial policy adopted by the practice and implemented by the office staff.

Luis Salazar, MD, a family practitioner, owns Provida Health Center in Gurnee, Illinois. He has a very successful practice efficiently managed by his wife Consuelo. The practice was already collecting well at the front desk. However, they were unsure how to handle the growing number of unemployed and uninsured patients, bounced checks, some questionable insurance refund requests, and fees and policies for administrative services not covered by insurance. They reviewed their office financial policies and updated them to match the economic realities and demographics of the community and the types of insurance plans the practice accepts.

Edmund Vizinas, MD, is a solo internal medicine practitioner in Chicago. He operates a busy practice staffed by a registered nurse (his wife), a receptionist, and a biller. Like many other small practice owners, he is constantly searching for ways to maintain his income.

When I visited Vizinas at the end of his fiscal year, I commented that his collections at the front desk were relatively poor and that he needed to change the process. After discussions with staff and continued lack of improvement, he replaced his receptionist, and things have been much rosier since.

Brooke Jackson, MD, is a busy downtown Chicago dermatologist and Mohs surgeon. Her practice outside of Mohs is mostly elective, with patients seeking everything from acne treatments urgently needed before the wedding, to botox and other "fountain of youth" therapies.

Jackson has devised a system for getting paid by her patients for elective procedures. She has created a detailed document that all new patients sign, committing the patient to his obligations, something I have not seen before in my 30 years as a consultant.

In addition, she requires uninsured patients and patients not carrying insurance in which she participates, to sign an agreement that commits them to paying their debt for services not paid for when the service is provided. Patients sign these documents before seeing her and the doctor-patient relationship is established. If a potential patient attempts to change the wording on the documents, he is asked to seek services from another dermatologist.

Robert Bastian, MD, has a specialized, two-physician laryngeal practice in Downers Grove, Illinois. His office manager, Susan, is highly effective and monitored the desk collections in 2010.

We established a goal of beating a 93% collection rate for copays at the front desk in 2010, which she surpassed. One of her secrets is her staff. Highly focused on quality of service at the clinical and administrative levels, and very aware of how patients are treated at all contact points in the office, this practice's staff understands how to ask for payment and how to thank patients for their cooperation. They are also skilled at diffusing anxiety, misunderstanding, and the other emotions at play in a physician's office.

The key to success in financial policies is in the implementation, not the drafting. So develop the policies in joint meetings with the staff so that they buy in and are committed to making them work. Also, be prepared to allow for changes as payers alter their policies and procedures.