Medical Practices with Poor Collections

Many practices are having a tough time, and face variety of challenges, considering today's economy.

Accounts receivable is a major concern for any practice in today's market.

Many practices struggle with self-pay patients and insurance companies that don't pay on time, or at all.
There are pluses and minuses when it comes to in-house billing and using a Billing Firm(3rd party). It all depends on the owners preference and the bottom line.

Some practice owners are convinced that the best way to is to have an in-house person do their billing. It might depend on how busy the practice is, how knowledgeable the biller/billers are, do you have a dedicated biller, how well is the biller compensated for the work that he/she is doing, how knowledgeable is your practice manager, or who is doing monthly analysis. These are all factors that go into how well your practice is doing when it comes to collections.

Something to think about:
Are you really saving money?
Do you have extended A/R?
Is it a trust issue?
Is your practice as busy as you want it to be?

According to the Darnell Institute of Business Research, the average cost of working an account internally, over six month period, is $31.60 per account.

Some practices spend so much time on their past due accounts, that by the time they get paid, if they get paid, the cost to collect on the account surpasses by far the value of the collected amount.

Some insurance companies have been known to delay payments. This increases the number of aging sheets, and reduces the chances for recovery.

In most cases using a third party for insurance billing will increase recovery.

It has been stated, if you take one in-house employee that is handling your billing and have them make three calls per day, with each call of about 20 minutes on hold, the in-house employee working 50 weeks per year at $16.00 per hour is paid about $4,000.00 a year just being on hold!

If you take a real look at your day to day operation you will see how much money you are losing.
The same in-house employee can be bring in revenue handling marketing for your practice, or improving your patients care.

If you have the same person handling your front desk and billing at the same time, your practice is suffering!

Every practice can improve their operations by evaluating the day to day process and modernizing.

Most third-party billing services that you can find in your area are not paid until you get paid, something to keep in mind!
The incentive is there for them to do everything possible to get you paid.

I am not saying that every billing company operates the same way, some work on volume.
You have to find a third party that you would be comfortable with and get proper care, same type of care you give to your patients.

There are way to improve your bottom line, everything starts with reviewing your practice policies on billing and collections and educating your front desk staff.
Your staff must educate your patients about your payment terms prior to appointments and be able to spot early warning signs, before an account could become a problem.
It helps to have dedicated employee's.

The use of a collection agency is something that can't be avoided in some cases. If the account is past due 60-90 days from the due date and you tried all the usual options, this account may require third-party collection intervention.

Keep in mind in most cases "Ninety percent of the collections budget is spent to collect 10% of past due accounts." - Dartnell Institute

Remember - Nobody Collects Every Account!

The typical collection agency, collects on the accounts that are six months or older at a cost of 30-50%.

Education and understanding of your day-to-day operation, is the only way you will be able to save your practice time and money, at the same time you will benefit from improved cash flow.

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Posted by a Practice Management Consultant at Real Practice Solutions, LLC. in New York. We specialize in making your practice work more efficiently and more profitably.
http://www.realpracticesolutions.com/