4.28.17 Issue #790 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

3 Ways to Improve Collections and Grow Practice Profits
By Sally McKenzie, CEO

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If practice profits are down, it’s likely time to make some changes – starting with developing a financial policy and clear collections protocols. Once you have these in place, you’ll start noticing changes. You’ll have more steady cash flow and finally be able to save for retirement, or invest in that equipment you’ve been eyeing. This is great, but there are ways to achieve even better results. Here are a few more tips:

1. Don’t Hire Just Anyone to Handle Collections
While it’s important to put collection protocols in place, it’s just as important to hire the right person to handle this system. This can be a challenge, simply because not everyone is cut out to be a Financial Coordinator. You need someone who is assertive, tactful, polite, confident, and goal oriented. If the team member you put in charge of collections is uncomfortable with confrontation and doesn’t like working with numbers, it will lead to nothing but frustration for everyone involved.

Your Financial Coordinator must understand it’s his or her job to collect payment from patients, and this task can be difficult at times. To help ensure success, provide the proper training, tools and scripts. Take the time to train your Financial Coordinator on how to make effective collections calls. These calls should never be confrontational. The team member should work with patients to resolve any issues and ultimately collect payment.

Hold your Financial Coordinator accountable for collecting money, generating accounts receivable and following up on delinquent accounts. Only task one team member with this job – if more than one person is responsible it could lead to confusion and even conflict.

2. Monitor Accounts Receivable
As much as you might want to avoid it, you have to know what’s going on with your accounts receivable. Be prepared, because if your practice is struggling, the numbers could be pretty alarming. No matter what you find, just know you can take steps to make the necessary improvements to get your practice back on track.

OK, take a deep breath and follow these steps:

Generate an aged accounts receivable report every month. The report should list every account with an outstanding balance and date of last payment.

The accounts receivable report also should “age” the receivables showing the “current” column, which is revenues produced in the last 29 days that have not been collected. It should also provide a breakdown of accounts that are 30, 60 and 90 days past due.
Total all monies more than 90 days delinquent. The percentage should not be more than 10% of your total accounts receivable.
Examine the charges in the report’s “current” column. These are uncollected monies produced in the past 29 days. Because the practice should have a minimum of 45% over-the-counter collections for the month, there should be no more than 55% in the current column awaiting insurance reimbursement.
Run the report with credit balances. Credit balances need to be added back to the total accounts receivable.
When you’re done, compare the totals to your monthly production. If they’re more, you likely have a problem with billing and/or insurance. Try these fixes:

You don’t have to send patient bills out once a month; send them as often as needed. Include a self-addressed envelope with every bill and remember to include the due date. To receive payment faster, I suggest you consider offering electronic billing. This option is often more convenient for your patients than sending payment via snail mail.

Every time you send a bill that’s 30 days past due, include a personalized delinquent message. Here’s an example:

“Mrs. Simmons, we did not receive your payment on March 16 as requested. If you are having financial difficulty, please contact our office. Otherwise, please take care of this account balance by May 11.”

This can be tricky, but the Financial Coordinator should be able to determine how much of the bill the insurance company will pay and then communicate that to the patient. Make it clear this is an estimate and may need to be adjusted if insurance pays less than expected.

3. Tell patients about your financial policy. Once you have a policy in place, make sure both new and existing patients are aware of it. Keep it updated and don’t get in the habit of making exceptions. It’s also important for your team members to understand the policy and know when and how payment is expected from patients.

When patients don’t pay on time, it hurts your practice and makes it difficult for you to give raises, pay for CE, invest in practice upgrades and save for retirement. Establishing a clear policy, hiring the right person to handle collections and making sure patients know when payment is expected are all ways to improve collections and grow practice profits.

For additional information on this topic and more, visit my blog: The Lighter Side

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
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