Tricks for avoiding bad debt issues in your medical practice
Bad debt is on the rise according to a 2008 survey from Transunion. This survey reported that almost 80% of the hospitals responding indicated bad debt growth of between 6 and 20 percent since in the past 20 months.
Additional important information in the survey included:
- Consumer Directed Healthcare Plans are a source of concern for hospital administrators. Almost 80% believe they will be a significant source of additional bad debt by the end of 2010.
- When ranking business objectives in order of importance, 43 percent of respondents said increasing collections at the time of service and post discharges were their number one objective, followed by improving operational efficiencies at 21 percent and decreasing bad debt at 18 percent.
These data points show a compelling need to revisit medical practice patient collections and insure it is being done effectively and efficiently. Tools and approaches that can serve a practice well include:
- Expand your use of the latest generation of on-line bill presentment and payment acceptance services/applications. These latest tools prevent you from ever being unable to accept a form of payment and they can lower your cost of pursuing patient balances.
- Do not allow you credit card readers to be a bottleneck. The latest ones are inexpensive (since they are software based and hook up to a front desk PC). You should have at least two both for backup purposes and to facilitate taking payments from multiple patients at once. In addition, try and use one that converts checks to electronic payments for almost instantaneous processing of checks.
- Put in place a clear policy about paying co-pays (and any other amounts due) on the day of service. Once in place; stick to the policy. If the policy allows patients to be seen without paying amounts due on the service date then make sure they leave the office with the information they need to pay you quickly - a patient statement and an envelope with the payment address.
- Prioritize patient collection efforts by more than just the balance owed. Consider the patients likelihood to pay. A $1,000 balance from a patient that is only 20% likely to pay is worth much less than a $500 balance from a patient that is 80% likely to pay. Elements to consider when accessing likeliness to pay include prior payment history and employment status.
- Use a monthly bonus system for employees that collect patient payments in the office. Make the amount meaningful and the metrics clear and easy to track.
Follow these steps and you can side step the bad debt train wreck.
Copyright 2008. Carl Mays II
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