If you find yourself working longer and longer hours seeing more and more patients
but yet your income at the end of the month is shrinking, you are not alone. The
overhead of healthcare practices has skyrocketed. Patient care has become more expensive
but none of that additional expense becomes increased revenue for your practice.
How do you reverse this trend? How do you provide the kind of care you want for
your patients but still achieve that elusive dream of financial freedom? The key
lies in taking a hard look at some internal processes and making a few simple fixes.
Cash flow is the most important component of any business. To pay your employees,
to pay your expenses, to finance marketing and expansion, you must have the proper
amount of cash at the proper time. With ever burgeoning overhead how do you keep
up with this and ensure your cash flow will meet the needs of the practice?
The patient financial transaction flow (PFTF) is the key. This process holds the
key to your financial freedom. It makes the difference between a profitable practice
and money losing one. It makes the difference between having the cash you need to
run your business or having to continually seek expensive alternate sources of cash.
It makes the difference between running the practice your way or the practice running
you.
Here is the typical scenario for the patient financial transaction flow. A patient
makes and appointment or walks into the practice. The first thing that happens is
a check of the patient insurance eligibility is made. Once this information is discovered
any co-pay amount is collected either via cash, check, or credit card. Next the
patient gets examined and either a treatment plan is discussed or the patient is
treated. At that point further payment arrangements need to be made. Depending on
the amount these may be more expansive than just cash, check, or credit card. In
addition to these methods you may need to offer a recurring payment plan, patient
financing options, or a billing program. At last resort you may give in to the patient's
request to "just send me a statement". We will discuss more on this option later.
The patient leaves after the arrangement has been made and the practice will proceed
to submit any insurance claim that arose from the treatment. This process seems
very straightforward and you recognize it as something that happens all the time
in your practice. Let's take a closer look and examine it as it pertains to your
practice.
As a starting point, examine some key measurements of your practice and ask these
questions: What is the total amount of my accounts receivable 30/60/90 days plus?
How much falls in the 60 days plus? How many statements does the practice send out
each month? What is the average dollar value of those statements? How does your
front office check patient eligibility? How much time do they spend on the phone
in any given month just checking patient eligibility? The answers to these simple
questions can mean the difference between a profitable practice and money losing
one.
To achieve financial freedom the goal for you should be to run a "statement-less"
office. If the answers to the above questions show you have several thousands of
dollars in both accounts receivable and in the dollar value of the statements you
send out each month you are loaning your cash flow to your patients. Not only are
you loaning your cash flow, you are receiving no interest and, in fact, you are
losing 10% per month on the value of that money! It is a fact that the collect ability
of money decreases 10% for every month that it stays uncollected. If you apply some
simple math you begin to see how the practice overhead can get out of hand very
quickly.
The second aspect to our analysis has to do with how your front office spends its
valuable time. Analyze the amount of time that is spent just checking on patient
insurance eligibility. The majority of this is wasted being on hold. Again, apply
some simple math to multiply the amount of time spent and the hourly wages and you
can see how much this process costs you
We have identified the two biggest areas of overhead cost by examining the patient
financial transaction flow. Next comes implementing a process to bring these costs
in control. This is where you become a "Statement-Less" office.
The first area to attack is delinquent accounts. The plan is to handle all existing
delinquent accounts and then put in a system to eliminate ever creating any additional
ones. Put your accounts into an account recovery system that will be affordable
and effective and get on to the next phase.
Going back to our patient financial transaction flow model, we will use this to
implement the processes. The first step is patient eligibility. To minimize the
time spent checking eligibility on the phone, we recommend implementing an online
eligibility system. In today's HIPAA world, insurance payers must abide by information
standards and this is leading us to a place where more and more eligibility information
is available online. Systems exist whereby you can enter basic payer name, member
number, date of birth, and gender and a request will be sent immediately to that
payer and a response will be received within seconds. Each payer will differ in
the amount of information which is returned but even if this process cuts your front
office time in half you have achieved significant savings.
The next step of our PFTF model is to collect a co-pay amount. This part is straight
forward taking cash, check, or credit card, but are you sure you have the best deal
for these components and not spending unnecessary money on excessive charges. It
would be wise to check on this.
From here it goes to the treatment plan discussion. You determine what the overall
charges will be, estimate the insurance portion, and come up with the amount the
patient is responsible to pay. Here is where process is very important. You should
have available to you all possible options for the patient. Of course, cash, check,
and credit cards are great but you need to have good patient financing options available.
These should be able to be utilized by a wide range of patients, not just A level
credit patients.
For amounts between $200 and $1,000 you should consider offering recurring payments
plans. This allows you to structure the payments, potentially even earn interest,
but you know exactly when you receive your cash. The last option is to take advantage
of billing programs which accept all patients and earn you interest. You ultimately
have recourse on these but you earn 18%+ and can increase practice profitability.
By having all the possible payments options available you eliminate the "just send
me a statement" syndrome. This is easily explained to the patient that the practice
no longer sends statements. Payment arrangements are made upfront in an effort to
reduce costs and keep patient fees low.
Congratulations, you are now a "Statement-Less" office! You are on your road to
financial freedom!
It sounds easy doesn't it? In reality it is easy but you must implement a system
and keep to the process. If you need assistance in implementing a "statement-less"
practice our company, HealthTranz Payment Solutions, specializes in working with
healthcare practices to achieve these results. We would be happy to assist you in
doing the upfront analysis to see where you stand today and implementing the system
to achieve maximum results.
Try these suggestions and see what kind of returns you can achieve. I think you
will be amazed at the results!
Tom Carroll
President
HealthTranz Payment Solutions
A division of US Merchant Systems
818-676-0995
tomc@usms.com
