Minimizing account receivable (AR) requires effective management, and can cause serious problems if mismanaged. Of course, all businesses must keep tabs on their AR, but there are often additional factors at play for medical practices. Most practices deal with a wide range of clients in different financial situations, so you aren’t going to find a solution that works for every patient or insurance company.
You need to think of your AR as a flowing river – it will ebb and flow, but you shouldn’t expect it to dry up. It’s highly unlikely that your AR will ever reach zero, so you should set your sights on minimizing your AR, not resetting it entirely.
But how can you do this when the medical field is such a difficult one to navigate financially? Here are 10 simple things you can implement in your practice to minimize your AR.
- Ensure You’ve Got the Right Software and Support – As a practice, you should be able to know exactly how your AR is looking with just a few minutes’ notice. If you ask your staff or yourself how the AR is doing, and get the answer “well,” or “okay,” something is missing. Ensure you have the right systems in place, so you always know how your AR is looking.
- Offer Your Patients’ Guidance – The lack of cash flow you’re experiencing isn’t always down to patients and insurance companies trying to ignore you altogether. Sometimes, patients are simply overwhelmed by the process. Ensure your new patients understand how you work and offer guidance where appropriate. This can be as simple as supplying a leaflet that explains how to understand their policy.
- Equip Your Staff – Are your staff fully equipped to talk with patients and insurance companies about unpaid bills? You shouldn’t expect your staff to simply “know” how to deal with an emotionally charged situation – especially when on the phone with a stressed patient. Give them the training, tools, and even scripts to help them navigate these situations effectively.
- Don’t Make Paying Hard – How can you make paying your business easier? Can they only pay by card? In one lump sum? The more flexible your payment options, the more money you’ll see. Consider offering payment plans, as patients who may not pay otherwise because they’re overwhelmed by the cost of their treatment will be better able to tackle a payment plan. Equally, consider adding a portal patients can log-in to and pay some or all their outstanding bill online, without having to talk to someone.
- Expect Payment for Checkups at the Front Desk – Try to develop a policy of asking for payment for relatively small fees before or after appointments. This will minimize your need to chase for small outstanding amounts long after you invoice.
- Change Your Days-to-Pay Policy – How long do you offer your clients (or their insurance companies) to pay before you start chasing? If it’s a 30-day policy, consider changing it for different amounts so you don’t leave the door open for those who can
- Offer Incentives – Many other industries offer incentives (such as discounts or extras for free) for paying on time, or within a certain time frame. You can customize this depending on how long your AR is outstanding – perhaps you offer a 10% discount for paying in the first 3 days of receiving the invoice. If you’re a practice that works with a specific community, you could offer a gift certificate to a local restaurant.
- Develop a System for Difficult Insurers – Are the same three insurers a problem for you? Work on learning their processes so you can always be one step ahead, so they have no excuse to pay slowly.
- Don’t Lose the Human Element – Have you got software in place that prints and sends out demand letters automatically? If so, ensure there are a few people involved in the process to check-in and add in a human element. These letters are often cold and impersonal, and patients can spot them for what they are: automated. If they feel like you are simply demanding money with no care for their mental or physical wellbeing, they won’t trust you, may badmouth you, and are less likely to work with you on a payment plan.
- Consider Using a Collections Agency – Finally, if all else fails, it’s time to work with professional debt collectors. Find an agency, or two, you trust to work with you in a way you feel is aligned with your values. Then, set up a process or system through which all outstanding accounts must go through before the collections agency is engaged. Upon a certain date after the bill was issued (say 60, 90, or 120 days), you automatically get the collections agency involved if you have not heard from the person responsible for paying the bill. A medical or a dental collection agency is very effective in recovering unpaid bills from patients.
You don’t have accept high AR as a medical practice – you just have to control it. If you employ these 10 tips, you’ll see your outstanding AR drop dramatically.