Five Tips to Better Manage Your Revenue Cycle

February 14, 2012

It is vital that practices have systematic ways to address patient collections; the following strategies can help your practice collect all that it is due.

What is your current percentage of collections coming directly from patients? Greater patient deductibles, more high-deductible health plans, and increasing patient copays have pushed patient collectibles in many practices as high as 30 percent of overall collections - up from 10 percent to12 percent just a short five years ago. Have you taken a serious look at how you are handling these private payments as part of your overall revenue cycle? It is vital that practices have systematic ways to address patient collections, in order to stay on top of their revenue streams. The following strategies can help your practice collect all that it is due: 

1. Patient financial policies. If you already have a financial policy for your patients, then you should review it; if not, now is the time to craft one. A basic policy should describe for your patients what is expected of them in terms of paying for your services. You should start by stressing the fact that your practice is providing a service and expects to be paid. Additional details to include:

• Copays are due at the time of service;
• Staff will ask for any outstanding patient balances at the time of service;
• Patients who are unable to make copayments at the time of their visit will be re-scheduled; and
• Any extra costs incurred in attempting to collect balances due, e.g., collection agency fees, will be added to the amount owed to the practice.

Each patient should be asked to sign a financial policy, given a copy, and have a copy filed in their chart. It should also be posted prominently on the practice's website.

2. Training front-desk staff. The best and cheapest way to collect copayments is when the patient is in your office. A trained staff member can ask for these balances using prepared scripts such as "will the balance due be cash, check, or credit card?" The most important point is to not give the patient the opportunity to say "no!" Many practices keep credit cards on file, which, if handled with appropriate security measures, work well. Don't forget to train your staff on the best way to greet and collect from your patients.

3. Patient discounts. Your staff members should also be given guidelines agreed upon ahead of time by the physicians for key situations. For instance, does your practice offer the complete self-pay patient a discount at the time of service - collecting from 25 percent to 50 percent of billed charges? Another question to answer upfront is whether the patient will be seen if the copay isn't collected prior to the visit. It is important for all your physicians to follow the same policy. If your staff members are given solid guidelines to follow, then there will be little interruption when assisting each patient. If your patients understand your practice's expectations (financial policy) upfront, then your collection efforts will be that much easier.

4. Billing statements. If patient statements must be sent it is important to define what a delinquent account is, and when you will send outstanding balances to collections. I suggest practices send only two statements: Send the first statement as soon as possible after the patient visit and the second statement one month later. Instead of using automatically generated statements consider sending hand-written, invitation-style envelopes with notes inside indicating the patient has been "invited" to pay the balance due. Another option is to use different colored envelopes, in other words, any way you can encourage your patients to open their statements rather than simply throwing them away - as just another statement from the doctor that can be ignored.

5. Tracking A/R. Tracking accounts due on a daily basis will also help improve overall collections. Start off by jotting down the expected amounts due from each patient on the daily schedule, including copays, deductibles, and past due balances. Then, at the end of each day generate a report on all payments received and those that were not collected - make sure to include the reasons for not collecting the full balance due. This information is very useful for training staff to become more effective at collections and also tracking patient activity.

These financial concerns will only continue to increase, as will the pressure on your practice to collect everything it is due. Making everyone on your staff aware of the importance of prompt and accurate collections will invest them in the health of the practice. Encourage managers and staff members alike to take a serious look at how they are managing/contributing to this piece of the revenue cycle.

Owen Dahl, FACHE, CHBC, is a nationally recognized medical practice management consultant and author of "Think Business! Medical Practice Quality, Efficiency, Profits," "The Medical Practice Disaster Planning Workbook," and coauthor of "Lean Six Sigma for the Medical Practice: Improving Profitability by Improving Processes." He can be reached at odahl@owendahlconsulting.com or 281 367 3364.