It’s a problem faced by virtually every medical practice — dealing with patients who pay their bills late, or not at all. Accounts not paid within specified terms can severely impact the overall cash flow of a practice. A clearly defined, carefully communicated, yet diplomatic payment policy may help avoid difficult collection situations.
These 10 simple steps can dramatically improve collection results:
- Have a defined credit policy. Clearly state when accounts are due. If patients are not informed that accounts are to be paid within a specified time frame, chances are they will pay late or, sometimes, not at all. Make sure each patient receives a written statement of your practice’s terms of payment and acknowledges receipt of the information with a signature.
- Invoice promptly and send statements regularly. If your practice doesn’t have a systematic invoicing and billing system, get one. Many times patients don’t pay simply because they haven’t been billed or reminded in a timely manner. This situation occurs more frequently in smaller or newer practices where understaffing makes efficient handling of invoices difficult.
- Use “address service requested.” One of the most difficult collection problems is tracking down patients who have “skipped” — moved without informing your practice of a new address. The U.S. Postal Service has a procedure for addressing this situation. Statements, appointment reminders or other correspondence should have the words “address service requested” printed or stamped on the envelope or postcard directly under the return address in the upper left-hand corner.
If a statement or an invoice is sent to a patient who has moved and the words “address service requested” appear on the envelope or card, the postal service will research the individual’s address. If it can locate a change of address for the addressee, it will send your practice a Form 3547 showing the correct address for a small fee. This will help keep your practice’s address file up to date.
- Contact overdue accounts more frequently. No law prohibits your practice from contacting a patient more than once a month. The adage, “The squeaky wheel gets the grease” has a great deal of merit when it comes to receiving payment on “slow-pay” accounts.
Contacting slow payers as often as every five to seven days will allow your practice to diplomatically remind patients of your terms of payment. This type of regular, focused contact should help settle most accounts before they become seriously delinquent. Reminders can be generated in-house by staff or outsourced economically to a company designed to handle this kind of early intervention.
- Make decisions based on your aging report, not your feelings. Many practices (or well-meaning staff members) have let accounts age beyond the point of being collectible because they “felt” the patient would pay eventually. The truth is that, if your practice isn’t being paid, someone else is probably receiving “your” money. So stick to your practice’s systematic follow-up plan. It will soon be apparent who intends to pay and who doesn’t. Take appropriate action once you know where your practice stands.
- Make sure your staff is trained. Even experienced staff members can sometimes become jaded when dealing with past-due accounts. Frustrations can run high when patients have made and broken promises to pay. Make sure the staff is firm but courteous when dealing with nonpayers. Your practice’s collection staff may benefit from customer-service training for delinquent accounts because, in effect, they must “sell” patients on the idea that the practice expects to be paid on time. Make sure that your staff is trained to bring the account current while still maintaining patient goodwill.
- Admit and correct any mistakes on your part. Sometimes patients don’t pay because they think your practice has made a billing error. If careful research shows that to be the case, quickly admit the error and correct it. Generally, people realize that mistakes can happen in business and are very relieved to have things cleared up. Denying an obvious error only feeds the resentment patients may harbor.
- Know and follow the collection laws in your state. In many states, businesses are governed by the same collection laws as collection agencies. For example, calling to collect on an account at an odd hour or disclosing to a third party that someone owes your practice money are just a couple of the collection practices that can cause serious repercussions. Contact your state’s Department of Finance for clarification on your state’s collection laws.
- Use a third party earlier. If your practice has systematically pursued an account for 60 to 90 days from the due date and still not received payment, the patient is sending you a message. More than likely, your office staff has requested payment four to six times already in the form of phone calls, letters and statements. The time and financial resources budgeted for internal collections should be focused on no longer than the first 90 days. The bulk of accounts can and should be collected during that time.
After 90 days, a third party can motivate a patient to pay in ways that your office cannot, simply because the demand for payment comes from an entity other than your practice. Avoid paying a percentage to a contingency collection agency, using small claims court or hiring an attorney. Instead, use a flat-fee collection service such as GreenFlag Profit Recovery by Transworld Systems to save your practice both time and money.
- Remember that nobody collects every account. Even with a carefully designed and administered collection plan, there are a few accounts that your practice will never collect. Save time and money by identifying those accounts early. Instead, improve the practice’s cash flow by focusing on the vast majority of accounts that do pay.
Developing and implementing a sound collections policy is a vital part of running a successful medical practice. Follow these 10 simple steps, and watch your practice thrive while continuing to maintain a good professional relationship with your patients.
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About the author: This article originally appeared in the March 2011 issue of Executive Update. It was written by David Wiener, an internationally recognized expert in the field of medical accounts receivable management. With more than 30 years of experience in all facets of medical practice administration, he is a sought-after speaker and consultant.