Developing cash-based services can generate new revenue and help unshackle you, at least in part, from managed care. The big challenge: collecting from patients unaccustomed to paying directly for their care.
A larger percentage of patients are paying for a greater portion of their medical expenses. Employers' health plans are requiring larger deductibles from patients, and patients are increasingly held financially responsible for their medical care. We seem to be headed back in time to when physicians' staff matter-of-factly collected payment at the time of service.
When you add to this new fiscal terrain the fact that some practices are introducing cash services to pump up revenue, it is clear that the medical services landscape is indeed morphing into a blend of the old and the new.
This shift "back to the future" can be anything but seamless.
In more recent years, practice staff have traditionally collected small copays from patients and left the rest to the billing department. These staff may have more than a little difficulty now asking patients for larger payments. Collecting more at the time of service requires a change of mindset. Your practice must adopt and enforce a firm financial policy reinforced by staff training on over-the-counter collections.
Where to start?
Begin by reviewing your existing financial policy. Develop a patient payment policy that addresses large deductibles, copays, payment on patient balances, and collection for cash-only services. Clearly communicate to your patient base your expectations for payment, including when exceptions are permissible.
For example, if there is a $600 existing patient balance, do you expect the patient to pay the entire amount when he next visits the office, or will you accept two equal payments of $300 - one over the counter and the next within 30 days? How will you communicate your expectations to your patients, and how will you handle hardship cases?
Although physicians play an integral role in developing their practice's financial policy, Judy Pickering, office manager for a primary-care medical group in California, says, "Finances work best when the doctors have staff they can turn the collection process over to without the need to interfere."
Regardless of which policies and procedures you enact, you must establish an effective method for educating your staff and patients about the new rules. At minimum, any new policies should be orally presented to staff, appear in your billing handbook, be added to your employee training manual, and be placed on both your Web site and in a clearly visible spot at your practice's front desk.
You can further support your expectations by placing a notification of payment policy on your patients' monthly statements. The consistency with which your staff communicates and applies your policies will play a vital role in your success.
For staff unaccustomed to asking patients for money, provide a training session supported with practice scripts and role-playing. Staff members must be comfortable asking patients for payment, and it's your responsibility to teach them to do so and then hold them accountable.
FOLLOW THE EXPERIENCED
You can learn a lot from practices that already provide "cash services" to their patients. "Good communication is the key," says Linda Minkel, administrator for Pacifica Institute of Cosmetic and Reconstructive Surgery in Camarillo, Calif. "We query our patients when they first call in to determine whether their needs are cosmetic or reconstructive. Following the consultation, cosmetic patients are given a written estimate of fees for the elective procedure that is being considered. These fees must be paid prior to the surgery. If it's a matter of insurance, we do the pre-authorization following the consultation. Once we obtain authorization, the patient is called to schedule the pre-op appointment. At that time, we let her know what is covered by insurance and what her financial obligation will be."
The more your patients know about their financial responsibilities in advance, the better off you are. No one likes being caught off-guard. Tell your patients what they must be prepared to pay before they enter your office. This gives patients an opportunity to discuss the matter with you and gain a clearer understanding of your policies, if necessary.
Ophthalmologists, for one, are already accustomed to weaving cash services into their traditional medical services, which are typically covered by patients' insurance. For laser eye correction surgery and other elective procedures, patients must pay cash up front. Ophthalmologists' existing success with integrating optical departments within their offices - which patients readily recognize as a "retail" service in which they are usually required to submit payment when they order their eye wear - has helped ophthalmologists integrate other cash services into their practices.
Such a transition is not as easy for primary-care practices.
However, faced with the reality of insurance-driven larger deductibles and the current trend toward cash-only services, more and more practices of varying specialties must evaluate how much of their revenue they expect to collect from these areas and develop systems to ensure they get paid for what they do.
Hanzelik, Horton & Daya - a medical group in Westlake Village, Calif. - provide primary-care services to their patients with a focus on holistic medicine. They have a massage therapist on staff, and they offer travel medicine services. These services are offered on a cash-only basis.
"Our check-out staff is well informed on what to collect when the patient's visit is complete," says office manager Judy Pickering. The group has trained its entire team on the specifics of reviewing patient account activity to determine patient balances. "Patients expect to pay for cash services," says Pickering. "The insurance patient is often more of a challenge."
There are other benefits to the addition of cash services to a practice. "It helps boost practice-building efforts," says Pickering. "Patients come to our massage therapist by referral from other patients, and they have not necessarily been seen for medical services in our office. ... It's an added bonus that patients rave about our services."
If your receptionists do not know how to review accounts or are not prepared to ask patients for payment, take heed. Collecting at the time of service is the ideal time to obtain payment on existing patient balances. With larger deductibles and increased patient responsibility, it's important to train your staff to ask patients for what they owe as a matter of routine.
Of course, some of your employees may never be comfortable asking patients for money, and they may need to be moved to different staff positions. "We have one point person, the patient coordinator," says Minkel of her cosmetic and reconstructive surgery office. "She takes responsibility for informing patients of their charges and collecting the entire payment. Elective services are always paid for in advance."
When large charges are involved, it is common among financially savvy medical practices to draw up a written financial agreement and have the patient sign it before services are delivered. Such documentation can help you avoid potential misunderstandings and is important should collection problems develop.
If a patient balks when asked for payment, it is usually because collection at time of service has not been a customary procedure at your practice. On a patient's first visit after you implement a more stringent payment policy, try to cut them some slack. If they aren't prepared to pay, provide an envelope and ask them to drop by or mail the payment within 10 days.
LEARNING THE HARD WAY
When you add cash services to your practice, don't be over-zealous and let your marketing efforts outpace your common sense. It may be exciting to have lots of patients calling in to inquire about your new services or products. But it will mean trouble (and no payoff) if you don't articulate a financial policy that you clearly communicate to your patients and then follow up on.
I worked with a dermatology practice that learned this lesson the hard way. When it launched a laser hair removal program, it was so focused on "hitting the numbers," the practice scheduled everyone who had an interest without tightening up its financial controls. The group targeted a certain number of patients and wanted to break even in six months. The practice hit the numbers all right, but a lot of the money was on the books and not in the bank.
Within four months the practice called me because its accounts receivable were out of control. It's no surprise that a large portion of the problems were connected to the laser hair removal services. The time and effort spent recovering from this mess cost the practice dearly.
Introducing cash services to your practice requires clearly distinguishing the services or products you offer that require cash payment, and educating both your staff and patients on your collection policies.
Your practice will be left holding the bag if you fail to communicate your fiscal expectations and subsequently do not hold a patient accountable for payment at time of service. Chances are, if you don't collect payment then, you will be forgotten 30 days later when you move further down a patient's list as she struggles to pay her monthly bills.
Judy Capko is a healthcare consultant and author of the book, Secrets of the Best Run Practices. She is based in Thousand Oaks, Calif., and can be reached at www.capko.com.
This article originally appeared in the April 2006 issue of Physicians Practice.