How to prevent bad debt from damaging your medical practice
In a recent Transunion survey of hospital administrators, nearly half of the surveyed administrators say their hospitals have experienced a 6 percent to 10 percent increase in uninsured and underinsured patients since early 2007. Almost 30 percent observed an increase of 11 percent to 20 percent. The survey covered hospitals in 15 states.
Additional important information in the survey included:
- Almost 80 percent of hospitals executives are worried that Consumer Directed Healthcare Plans will cause bad debt to grow over the next 24 months.
- Hospital executives are spending a lot of time worrying about patient collection issues. Improving patient collections was the number one priority for over 40% of executives. Close to 20% have focusing on lowering bad debt as their top goal.
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.
- 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.
- Use a tiered approach to patient collections and match the collection effort not with the patient balance but with the expected payment. Credit Cards use this technique through the use of credit score. They know that a $2,000 balance on a consumer with a credit score with 720 is worth more to them than a $3,000 balance on a consumer with a score of 600. You can use this approach by looking at patients past payment patterns, healthcare credit scores (there are services that provide these) and/or employment status.
- 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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