Practice Financial Analysis - Part 7 - Poor patient receivables management (Patient A/R)

This week is a continuation of the high-level financial analysis of your practice.

Part of this analysis involves looking into your collections and related gross collection percentages. However, collections do not always meet expectations and there are a few possible reasons you should look for:

1. Shift in your payer mix (click here for last week's article)

2. Decline in reimbursement rates

3. Poor follow-up on unpaid insurance receivables (Insurance A/R)

4. Poor front desk collections

5. Poor claim filings

6. Not sending out patient statements

7. Poor patient receivables management (Patient A/R)

8. Possible embezzlement

 

This week I will be focusing on the 7th reason : Poor Patient Receivables Management (Patient A/R)

A large share of your reimbursement dollars now comes from the patient.

As we saw in last week’s article, as patient outstanding balances are on the rise, this  requires the practice to focus on front desk collection and , sending patient statements consistently among other things.

This week we will focus on various tactics to reverse poor patient receivables management.

Many practices resort to collections agency when patient balances grow out of control. This is not always the best approach. Turning over patient account collections is usually recommended as a last resort.

Knowledge is Power

The best approach to address patient account collections is to get patients to pay their bills in full, upfront whenever possible. This is where the front desk and phone staff play critical roles.

However it is important to note that the staff must be trained to be knowledgeable about patient balances. To engage in a financial discussion, they must know what amount is due at the time of the visit and also if there are any outstanding balances. This is essential as staff can be in a precarious position because they have to maintain good relations with patients while asking patient for payment and their level of knowledge can affect this. This must be ingrained in the culture of the staff. Each practice must have written policies not just for the patients but for the practice staff to follow.

A staff who tries to get patient payment on time of visit but is not be able to adequately answer a patient ‘s queries about their bill can affect how patient perceives the charges on their bill. On the other hand, if a staff is knowledgeable, he will be confident, firm and assertive yet still being able to keep a smile. There is a higher chance the patient will want to pay as they recognize that and more opt to meet financial obligations.

Decide on timeline for patient collections.

After sending patient statements as described in the last article, if a patient fails to pay the balance within a reasonable amount of time, you should begin mailing firm letters with an increasing sense of urgency. This is because according to various surveys there is a less than 30% chance of collecting money from a patient if that balance reaches 90 days.

If possible, you should have an in-house person or an outsourced person make physical phone calls to patients. Again, only using an external collections agency as a last resort.

After all possible methods have been tried, the practice must decide whether to write off small balances or turnover in account to a collections agency. Many things go into the decision-making process such as positive and negative impact of an unhappy patient and the time and effort and mental stress involved in pursuing collections. In any case, a written guideline should be in place.

Below is a summarized guideline every practice can implement:

  1.   Use technology to perform automated eligibility check as a part of scheduling and check-in process.

  2. Ensure pre-certification, authorizations, and referrals are in place before the visit.

  3. Collect co-pay, outstanding balances, deductibles etc. at the time of service.

  4. Make it easy for patients to pay by sending he- statements, enabling online bill payment, accepting credit cards, setting up payment plans etc.

  5. Train and retrain staff to make sure that everyone knows the patient billing process and is capable of having a financial conversation with patients.

As a last thought to this subject, in spite of everything, keep a smiling face, understanding that paying bills is not easy for anyone. Don’t make it personal. Help the patient understand that you are personally not asking them to pay, it is a combination of the insurance company and the doctors for the excellent quality of care that is provided.