10 TIPS TO IMPROVE YOUR MEDICAL PRACTICE CASH FLOW
Ready to get your medical practice cash flow up? You’re in luck! In this next installment of my Cash Flow blog series, I’ll walk you through some cash flow basics and a few best practices used by progressive practices. Make these changes and you’re guaranteed to see results.
Here are some of the top cash flow best practices you should follow.
Have a well-defined credit policy for your practice.
This needs to be something you can follow day to day and week to week. The policy should be in writing and shared with your staff. Make sure you not only hand it out to staff, but answer any questions and provide some training.
Maintain a collection policy for your entire practice, not one for each physician.
Multi-specialty and group practices often have a separate policy for each doctor. This can lead to a lack of clarity for the staff. Having a policy that covers the entire practice keeps things clean and simple and cuts down on confusion.
Create a fixed credit policy that covers:
- Broken appointment charges
- Interest charged on late payers
- Acceptable payment terms
Invoice promptly and send statements regularly.
Your accounts receivable is your practice’s largest asset. It is extremely important that you make it a priority. Patient responsibility has gone from 12% in 2007 to 40-45% in 2014. If you don’t have a system in place for sending statements consistently, you will lose money.
Make sure your staff is trained.
Every member of the staff should be aware of your policies regarding money. It’s also important to keep the clinical side separate from the business side of a practice so that patients don’t get into conversations with the doctor about their balance. Any money-related conversations should be directed to and handled by the business office so that the doctor can focus on practicing medicine.
Admit and correct any mistakes on your part.
The sooner you correct mistakes, the sooner the patient will pay their balance.
Know and follow the State and Federal collection laws.
You can read the Fair Debt Collection Practices Act here:http://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf
Make all decisions based on your aging report, not your feelings.
Practices that have the best cash flow make decisions based on their policies. They don’t base it on how long they have been working with the patient or how well they might know the patient. They use objective criteria around their aging. As an exercise, try covering up patient names when looking over your aging report.
Do not put aging boxes on the bottom of your statement.
If you put aging boxes on the bottom of the statement, you are subtly telling your patients that it is okay to wait until they get to the last box before a consequence will be applied.
Also, remove the Amount Paid box found on many statements.
This is a subtle cue to the patient that they have an option of how much to pay and then you get into the cycle of sending statements to collect the remaining balance.
Eliminate the Statement Date on your statements.
Change it to Due Date. We want to make it clear to the patient that they need to pay the bill by a certain date.
Some of these cash flow tips might seem like small changes, but they can have a huge impact. Try them out at your medical practice and watch the difference.