MGMA indicates that in 2010, more than 60% of patient balances are never collected.
This is not necessarily completely due to patients refusing to pay. Often, practices don’t understand what patients owe, and payment is not collected at the time of service which is when patients are most willing to pay.
Clearly communicating to patients what their financial responsibility is for services, and requesting payment at the time of service is critical for a practice to ensure proper and timely reimbursement. There are other reasons that you want to make sure you have a clear and consistent payment policy that you enforce in your practice.
Here are 3 not commonly thought about ways bad patient collections can hurt your revenue stream.
Word gets out in your community about practices that don’t enforce a collection policy at time of service or pursue outstanding patient collections. Most practices will only collect co-pays at time of service. Some practices don’t collect anything at all. If your policy on co-pays is not clear and/or not enforced, patients will request to defer their co-pays. This results in lower patient collections up front, and forces you to try and collect following the insurance company’s payment. This decreases your chances of getting paid and increases your cost involved with sending patient statements (more on that later). Have a clear policy in place, enforce that policy, and apply that policy to all patients.
Complications With Payer Contracts
How many statements will your office send to a patient before writing off the balance? Many practices will write off patient balances after sending 3 statements that do not result in a payment. If you’re quick to write off the balance, payers may consider that they are overpaying you for your services since you’re willing to accept their payment only and not pursue the patient’s portion. Many patients think physicians make lots of money off of insurance payments alone. You definitely don’t want to reinforce this myth.
Sending Patient Statements Costs Money
Consider the time it takes an employee to prepare a statement for mailing, the cost of paper and ink involved with printing the statement as well as postage. Collecting up front saves you a lot of money. If you are sending a statement for a minuscule $25 co-pay, you’re spending a lot to collect a little. The savings when collecting upfront at time of service as opposed to sending statements after an insurance pays can be as much as 20%.
Final Thoughts on Patient Collections
When you begin to view all of the consequences of not collecting at the time of service, you begin to realize that:
- You’re less likely to collect what’s truly owed to you
- You’re loosing too much money
- You’re spending too much to collect too little
- You’re potentially opening yourself up to a challenge of your collection practices from payers and patients
If you want to improve patient collections, establish a fair collection policy, commit to collecting at time of service and set clear expectations with your staff and patients.