What can a medical practice do to improve cash flow? For all medical practices, saving money wherever you can is always appreciated. To find out where your practice can save money, though, you must first know where problems may lie regarding your cash flow. Here is a common set of cash flow problems that medical practices are dealing with right now.
Healthcare Collection Practices Aren’t Viewed Like Commercial Businesses
Commercial businesses have many means of getting paid, and their collection practices do not undergo as much scrutiny as medical practices. Waiting for patients to pay you is not the same as waiting for someone to pay their cell phone bill. If that is not enough, most people don’t put healthcare commitments towards the top of their list of priorities.
Patients are Footing Their Health Bills More Often
Patient responsibility is representing a larger amount of total revenue on average these days. Low patient responsibility is a thing of the past. High deductible health plans are putting heavy emphasis on the implementation of systems that help to collect self-pay balances. $5 copayments are gone, and most office visits will average around $110 patient responsible.
However, a lot of patients have grown accustomed to low shares of healthcare plans and premiums when they cover services that have smaller copayments and deductibles. Some medical practices have reported that their patients are choosing not to pay their share, even if they can pay for it. Other patients try negotiating copayments as well as pricing for the services.
Insurance Reimbursement Rates are Falling
For years, doctors have had a dependency on insurance money. In the past, insurance reimbursements would represent closer to 90% of a medical practice’s revenue. But insurance reimbursements keep falling with every passing year. This is a pattern that is not likely to change soon, and a lot of patients still owe the remaining balance. A big problem is that many patients have not had the ability to pay their share for many years.
It is estimated by the MGMA that around 30% of patients walk out of medical practices without paying anything. Medical practices send 3.3 billing statements on average before the outstanding balance of the patient gets paid in its entirety.
Operating Costs are Increasing
Medical practices have to deal with the problem of continually rising operating expenses that come with more modern technology being used. Many practices lose revenue monthly because of these increasing expenses. As a means of making ends meet, some medical practices end up cutting staff and borrowing money. Not only is this not an ideal solution, but it is also one that cannot last long.
Healthcare collections get increasingly complicated with each passing year. Most collection strategies that worked in prior years will not suffice today. Medical practices do not often use all of the resources they have available to them to help manage their cash flow, and it can be difficult finding sound advice.
Medical practices need to take a proactive approach when following up on any accounts that are slow to make payments. The sooner you can detect problems that you have and intervene, the better. Practices should use the most modern tools available, as well as use techniques that are able to compete with all the commercial businesses for money.
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