As they say, “cashflow is king”. Cashflow is the single biggest financial factor in a business. Cashflow is simply, “cash-in-hand” as opposed to what you may receive in the future. In this challenging economic environment, practices are looking to improve cashflow. One powerful way to increase cashflow is to collect patient payments at the time of service. In addition to improving cashflow, practices can reduce administrative costs, and provide a better patient experience. But before discussing the importance of collecting patient balances, let’s first understand what is included in a patient’s balance.
Patient balances typically consist of several different types of charges, including:
- Deductibles: This is the amount that a patient must pay before their insurance begins to cover their medical expenses.
- Copayments: This is a fixed amount that a patient must pay for each doctor’s visit or for each prescription drug.
- Coinsurance: This is the amount that a patient must pay for their medical expenses after their insurance has paid its share.
- Uninsured services: This includes services that are not covered by a patient’s insurance, such as cosmetic procedures.
Let’s consider all of the advantages of collecting patient balances at the time of service:
Increased likelihood of getting paid: It is important that you collect payment upfront. If you do not collect payment at the time of service, the likelihood of ever collecting it decreases. This occurs for many reasons. Patients may not remember what they have to pay for. They may assume that this is something insurance will cover. It is also possible that other financial priorities have emerged in their lives. They may also not pay attention to bills.Patients may also not understand why it was not collected at the time it was due if they truly owed that amount. After all, that is how payment for other things in their lives work.
- Cash flow improvement: When you collect patient balances at the time of service, you receive payment immediately, which improves your cash flow. This allows your practice to have a more consistent and predictable flow of revenue, which is critical for managing your financial stability.
- Reduced administrative costs: When patient balances are not collected at the time of service, practices must follow-up with patients for payment by sending patient statements, making phone calls, using collection agencies, and other efforts. This is time-consuming and increases administrative costs. By collecting balances at the time of service, practices can save time and money and reduce the need for additional staff.
- Better patient experience: Collecting patient balances at the time of service also provides a better patient experience. Patients can receive a clear explanation of their financial responsibility, understand what they are paying for, and they can take care of their payment obligations during their visit, which reduces the likelihood of receiving future patient billing, statements, and collection efforts. This transparency and clarity improvespatient trust, promotes patient loyalty, and increases patient retention.
How can you implement collecting patient balances upfront in your practice? Here are a few steps you should consider:
- Ensure your practice is setup to take payments through multiple payment channels. This includes cash, checks, credit cards, and electronic payments through payment services such as Zelle, Venmo, and PayPal. The broader the range of payment methods, the easier it will be to accommodate patient payment preferences.
- Train your front-office staff on a consistent step by step workflow to inform patients of their financial obligations and to collect deductibles, copays, and co-insurance amounts upfront at every applicable visit. Include a system to monitor this at the end of each day. Also collect amounts for services not covered by insurance. Provide Advance Beneficiary Notice (ABN) when required.
In conclusion, collecting patient balances at the time of service is a crucial aspect of healthcare billing and critical for practice financial health. By doing so, medical practices can improve their cash flow, increase the likelihood of ever collecting on patient balances, reduce administrative costs, provide a better patient experience, and increase patient trust. This is a win-win for both medical practices and patients.