Medical Practice Management
Nov 06

Do you realize it’s all about the “front end”?

With the current trend of higher deductibles and co-pays, health care practices need to evaluate their current self-pay (patient portion) strategies and make needed adjustments. There is a growing need for practices to mitigate the effects of a growing self-pay population.

The most important thing a physician practice can do is to develop a policy and live by that policy.   Many practices may need expert advice and there are many ways of getting that advice. But here are 4 steps every practice can take to increase cash flow from front end collections.

The first step is for practices to assess and define the scope and responsibility of the front end in the revenue cycle.  The front-end of most practices, while becoming perhaps the most critical piece of business cycle, continues to be the least paid person in the practice.  Think about that! By analyzing the impact of self-pay on your practice (self-pay being defined as patient portion) and collecting on the front end will save substantial dollars by not having to employ a collection agency to collect on the back end.

Step two is training of front end personnel.  And by this I mean specifically designed classes, mandatory classes that purposely deal with collecting techniques. I cannot stress this enough.  Expecting the front end to collect and not giving them the tools needed to meet that expectation is setting them up for failure. The front end staff must also use available tools to calculate what that payment is.  Most insurance carriers have websites where plans are clearly laid out and co-pays and deductibles published.  By knowing these rules prior to the patient presenting, how much to collect should be matter of fact.

Step three is clearly defined, carefully communicated payment policy that all patients read and sign. Creating the expectation of payment to your patients means compliant patients. Offering a discount to self-pay patients (those without insurance in this case) is widely used and an acceptable means of collection.  That discounted payment should be collected at time of service.  For those patients needing hospitalization or surgery, hospital social workers are trained to deal with these situations and can offer one of several programs to help patients with these high cost services.

There are a growing number of patients who have been laid-off, filed bankruptcy or have been adversely affected by the slumping economy.  These patients require special attention.  Having financial counselors available to review (privately) their situation and make payment arrangements is a good pro-active way of dealing with these patients and also helping them to pay for services rendered.  If a patient has included health care debt in their bankruptcy, then you may have to make a hard decision about seeing that patient.  Each physician practice will need to think about and decide what their policy will be.

Step four is to develop a clear and easy to read patient statement.  Many studies have shown that the closer to time of service these statements are sent out, the greater the likelihood of collection.  Communicate, communicate, and communicate.

Numerous studies indicate that cash flow will see at least 10-20% increase by developing a plan and collecting on the front end. Money collected at the front end, is money saved on the back end.  The more efficiently your practice is at collecting owed dollars at time of service, the less it will cost you to collect after time of service.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →