Debt Collections for Medical Practices: Turning Unpredictable Revenue into Reliable Cash Flow

Medical practices of all sizes, from solo providers and small practices to large specialty groups face increasing challenges when it comes to collecting balances from patients. A combination of rising and complicated deductibles, complexity around insurance coverage and billing confusion along with the financial strain many people are experiencing means you’re seeing more patients paying slow or not paying at all.

For medical and healthcare practice owners and administrators, this creates a challenging cycle. The patient volume is there but month after month, you see inconsistent cash flow.

We manage debt collections for medical practices of all sizes and we’ve done so for many years. Let’s break down why many medical offices continue to have challenges around billing and what you can do to improve on time patient payments.

Why your medical practice struggles to collect patient payments

A growing concern for medical practices and patients is the trend toward high-deductible health plans. In recent years, we have seen more financial responsibility shifted directly to patients.

Many patients and consumers who once paid a small copay for medical visits and procedures now face deductibles in the thousands of dollars.

We’re also seeing out-of-pocket maximums escalate for health plans, and many patients are simply not prepared for larger medical bills. Especially when they are unplanned.

Confusion around insurance explanations

It’s no secret that if you’re working in a medical practice, but medical billing is becoming more complex. Patients should be receiving an explanation of benefits from their insurance provider. They also receive a statement from your medical practice and then on top of that, they can receive multiple statements from specialists, labs and more.

When patients get confused and do not understand their financial obligation, they will delay payment.

Financial policies lack clarity

Many medical practices, and you may be one of them, might be avoiding up-front financial conversations out of fear that discussing money up front may damage patient relationships.

But without clear financial policies, payment expectations and consistent follow-ups, patients can assume that payments can be flexible or optional.

That’s why it’s important to have these conversations and train your staff in how to communicate with tact and respect. That includes upfront expectations and training on how to become more comfortable discussing financial obligations with patients.

Delays in the billing process

We find this more in smaller medical practices but if statements go out late after office visits or procedures, often the connection to the service can fade. That goes for any type of billing, medical or other industry.

The longer the delay the less likely the bill gets paid and we continue to reinforce this with medical and health care practices.

How can a medical practice increase on-time patient payments?

Improving patient payments and even collections does not require aggressive tactics. It comes down to systems, clarity and consistency.

One of the most effective ways you can increase on-time payments and cash flow is to collect what is due at the time of service.

Medical practices can improve cash flow dramatically by doing the following.

• Verify insurance eligibility before each appointment.
• Estimate the patient’s responsibility in advance.
• Collecting copays and other known balances when the patient checks in.
• A medical practice can dramatically reduce negative cash flow by collecting at the time of service.

Establish and communicate clear financial policies for your medical practice

Just like any other business, your medical practice should have written financial policies that patients can access. It should have clear language that discuss co-pays, deductibles and payment timelines.

Many medical practices now require patients to sign a statement confirming they understand the financial policies and obligations. And once again, train your staff to communicate these expectations confidently but in a professional manner.

Other internal procedures that can help build cash flow in your medical practice

Offering structured payment plans is a good way to show good faith. Not all patients can pay in full immediately. As you know medical bills can be unexpected for many. Working with the patient is a good way to nurture that relationship.

Shorten your practice’s billing cycle. Billing early, submitting claims immediately and posting insurance payments promptly can increase the chances of positive cash flow.

Consistent statements and follow-ups are mission-critical. Develop a cadence of statements that keep your bill top of mind for that patient.

Partner with a professional healthcare and medical collection agency

Every medical practice will face challenges getting patients to pay due to the factors we have cited. When your internal efforts fail, partnering with a medical collection agency that understands your practice and the challenges you are experiencing can provide dramatic results.

Choosing the right collection agency that understands health care as well as the delicate nature of collections helps you maintain patient dignity and builds trust.

Not all collection agencies have expertise in medical debt so it’s important to look for agencies that understand health care, follow HIPAA compliance standards and other regulations, treat patients with dignity and respect and provide you access to detailed reporting. You want to resolve the debt and not damage your reputation.

Healthcare and the process of running a medical practice continues to evolve as you well know. Complex insurance and the shifting of financial responsibility to patients continues.

Debt collections in healthcare does not have to be adversarial. When you implement the right policies and procedures your medical practice can improve on time payments and maintain those strong patient relationships.

When you do this, you protect your medical practice’s financial health.