Importance of Timely Collection of Patient Balances on Practice Financials
The success of a private medical practice is no longer determined by just the quality of patient care. Physicians have willingly spent decades acquiring medical knowledge, but usually have limited knowledge or patience to deal with the financial aspects of a practice. However, dealing with finances cannot be avoided.
Many practices have succumbed to financial failures, and a major reason for this is how physicians choose to write off overdue patient finances out of empathy. But, it is important to know that writing off any deductibles can make you liable as they can be marked off as insurance fraud.
What Causes Delayed Collections?
Any private practice that seeks to stay afloat long term must be prepared to tackle issues such as timely collection of patient credit balances. This is not as simple as promptly billing your patients or applying for reimbursements. Several issues have complicated this process more. For instance, limited insurance plans and rising deductibles have increased out-of-pocket costs for patients. This in turn has led to delays in patient balance collection. But, delays in patient collection are a result of multiple factors, which have been briefly explained below.
Complexity of Payment System
More than 50 percent of patients with overdue patient balances are financially able to pay off their bills. These groups of consumers reportedly pay off all their finances in time. However, there are many patients who do not clear their dues in a timely manner and most of these dues end up being written off. The reason for this is most likely attributable to the complexity of the medical billing and payment system.
Inflation rates are rising globally, and this has impacted all sectors including healthcare. Patients are increasingly unwilling to pay off deductibles and copayments. Although little can be done to solve this issue, timely payment collections can ensure that your practice does not have to suffer the impact of inflation.
Out of Pocket Costs
While discussing the limits in medical insurance, focus has predominantly been on the impact on patients. But this issue has affected healthcare providers as well. Research studying the impact of insurance plan limitations on hospital revenue have estimated that for each patient without insurance or with insurance limits, the hospital has to bear a loss of 900 to 1000$ per person.
With a shift in the ratio of deductibles to insurance reimbursement, you can only expect increasingly significant impacts on your practice. As patients are more responsible for bearing healthcare costs, revenue sources are changing. Recent reports have found an 88 percent rise in patient responsibility to cover healthcare costs. Therefore, it is impractical to expect that insurance reimbursements alone will be able to finance your practice.
Unclear Information on Patient’s Insurance Coverage
Most physicians shy away from discussing issues such as insurance and finances with the patient prior to consultations or treatment. But without a clear idea on patient insurance coverage and deductibles, your practice and the patient may have to face unnecessary inconvenience, which in turn may lead to a reluctance in clearing any medical bills.
Although in-person consultations and elective surgeries are starting to resume, the pandemic has significantly affected patient volume. This has negatively impacted revenue for private practice as patients are reluctant to visit physicians, and choose to delay all non-urgent medical care. Furthermore, as unemployment rates rose with the pandemic, patient collections have been more difficult as most consumers are financially stretched to their limits.
Why Timely Collection is Important for A Successful Practice
Every business relies on steady revenue sources, and the same is true for private medical practices. While in the past, a medical practice’s revenue chiefly relied on reimbursements, the revenue responsibility is shifting more towards the consumers.The Affordable Care Act still has many issues to tackle, and despite plans to make healthcare more affordable, it is highly likely that most Americans will face an increasing burden to foot a large portion of their healthcare costs.
Many physicians choose to write off more than 75% of patient balances, which can severely impact practice income. By ensuring that your balances are cleared of all overdue bills, and by avoiding writing off any deductibles or out-of-pocket costs, you can maximize your practice revenue.
How Can Your Practice Tackle Patient Balance Collection Issues?
It is entirely up to the practice to increase patient balance collection and maximize revenue. To achieve this, some simple yet effective steps can be followed, which are as follows.
Make Payment System Easier
To ensure prompt and timely balance collection, the collection process of patient balances must be as simple as possible. This can be achieved by accepting multiple forms of payment, and establishing payment systems that are convenient for the patients.
Clear Payments As Early As Possible
Once a patient’s services are rendered as completed, it is best that all pending bills that the patient is responsible for personally are cleared on site. This can minimize the need for calls or follow ups with patients regarding payment clearance, while also ensuring timely revenue collection.
Obtaining Clear Information on Patient Insurance Coverage
Having a clear idea on patient insurance coverage and deductibles ensures that both the practice and the patient are knowledgeable regarding the costs that the patient may have to personally bear. This allows proper preparation from the patient’s side and minimizes incidences of reluctance to pay off any balances that are due.
Discuss Payment Issues Early On
Avoiding discussions on finances with the patients will only add hindrances to revenue collection. Early doubt clearance on all issues related to medical billing such as the amount of patient’s cost-sharing and deductibles will allow time for the patient to be better prepared to clear off all payments.
Handling the finances while also taking care of the patients can be a headache. Therefore, having an expert team trained to deal with medical billing and collection can be a rewarding investment for your practice. We, at Practolytics, do everything that needs to be done to handle your finances and ensure a profitable revenue, while keeping in mind patient care is always the primary focus.ALSO READ – Effects of Patient AR Build Up on Your Practices – Best Practices to Set Your House In Order