Bad Debt Is On The Rise. Is Your Medical Practice Prepared?
Almost half of hospitals senior executives responding to a recent Transunion survey reported a marked (between 6 and 10 percent) growth in bad debt over the past 18 months. Over 25% realized between 11 and 20 percent growth in this key metric.
Additional important information in the survey included:
- Nearly 79 percent of respondents said they are concerned that Consumer Directed Healthcare Plans will increase their bad debt within the next two years.
- 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:
- Better use of on-line electronic payment tools. The latest tools can make it easy for you to accept practically any form of payment on-line and for patients to pay in a self-serve manner.
- 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.
- Develop and rigorously follow a policy concerning patients that cannot pay co-pays (and other prearranged payments) on the day of service. Will you tell them they need to reschedule? Will you call and collect payments before they arrive? If you see patients that cannot pay on the day of service then make it easy for them to pay you after the fact. Do not wait for the claim to adjudicate to ask for them to send the co-pay. Give them a patient statement showing the co-pay balance due before they leave the office. Include a pre-addressed payment envelope.
- Tailor your follow-up based on the credit status of each patient. Your three basic categories could be: (1) insured, employed patients with a record of timely payments; (2) insured, employed patients with a spotty history; and (3) uninsured or underinsured patients. You might want to dispense with follow-up calls altogether for the underinsured or uninsured, but as part of your collection policy, you might help them sign up for Medicaid or charity resources from the get-go.
- Track how well your front desk staff collects co pays and coinsurance. Reward and discipline accordingly.
These steps can help you avoid falling prey to rising bad debt.
Copyright 2008. Carl Mays II
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