Patient Balances: Get Them or Get Ready to Close Your Practice

I read an article recently from CNN about physicians selling their practices to hospitals due to the impending accountable care organizations taking over. Although this seems to be an inevitable progression of this messed up healthcare system we now have, some things in this article struck a chord with me.

A physician in the story stated his practice was in trouble long ago, and that costs of medications are what really put him behind the eight ball. The rest of the story is that most medical offices are not managed from a business standpoint. Some feel it is taboo to talk about the money aspect of owning a private practice; that it would be insensitive to speak of, since you're in the business of healing people, not being greedy.

It's time to wake up. If you don't look at your practice from a business standpoint, you will most likely be retiring early, going to work for the hospital you sold your business to, or (gasp!) going to work for an insurance company who helped put you out of business.

What can be done to stop the bleeding? One of the areas I see over and over is physicians writing off patient balances. This option will close your doors very quickly. It's time for a mind shift on who carries all of the risk with this type of thinking and action. Oftentimes, physicians feel sorry for patients who claim they cannot pay their bill; some truly have financial hardship, and some who are successful business owners living on a cliff above the beach in a multi-million dollar home. I've seen both. Think of it this way, each time to write off a patient balance because you do not want to confront them, or you feel sorry for them, you are braiding another strand into the rope that your business will hang from.

What causes a patient balance, anyway? There are several scenarios where this will occur.

First, your front office staff did not collect the patient co-pay, coinsurance, or deductible upfront like they were supposed to (or perhaps you don't want to make your patient mad by collecting this …bad idea, folks). It could be that when the insurance was verified, they said the patient had a $20 copay when it really is a $40 copay. The patient's insurance could have terminated before their visit with you, or before you were able to send your claims in. The patient has no insurance and you were seeing them on a cash basis, but again, did not collect it up front.

Regardless of how the patient balance originated, they have received a bill. They don't want to pay it, they claim they cannot pay it, they ignore it, or they try to negotiate the amount down. Remember that discounting a patient deductible is considered insurance fraud and can add another strand in that hanging rope. So, now you have a large patient balance on your A/R report. You cannot let it sit there forever and just age out. So, you either send them to collections or you write it off. Neither scenario supports your business in the way you need it to. But this continues to be the reality for all of those physicians closing their doors because they can no longer afford to be in business. Insurance reimbursements will continue to decline, so don't expect those monies to float your business.

Having the patient get involved from the beginning is the best proactive advice I can give. When the patient comes in for a visit, give them your tax ID number and have them verify their own benefits.   

As I've mentioned before, you will see that you can verify a patients benefits numerous times and be provided different results. If the patient calls you back and claims they have a different result than you do, this is actually good news. Then, when the claim processes and the patient receives a bill, they don't automatically think your billing department is full of idiots. They've seen firsthand how benefits given can vary from phone call to phone call. Even if they opt-out of not verifying, you've made them aware that they may receive a bill if their insurance processes claims differently than you were told. There will be no surprise when the bill arrives, and the patient will be more likely to pay.

It's time you stop assuming all of the risk when there is a patient balance. They have nothing to lose; you have your practice to lose. Which do you want?