Improve Your Medical Billing and Collections by Offering Payment Options

Kathy McCoy, MBA April 25th, 2011

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Offer Payment Options and Improve Your Medical Billing & CollectionsIn the current economy, financial hardships affect patients and practices alike. Patient visits are down. Utilization of medical services is down. And, as any medical billing professional knows, patients’ ability to pay is similarly decreased. There is, however, an accompanying growth trend: An increasing number of practices are offering patients a variety of ways to pay the money that they owe for services rendered.

The reasons for extending payment options are no secret. From accepting a variety of payment methods to allowing patients to pay monthly, payment options generate cash flow. Accepting cash or check, for example, is ideal cash flow. Credit cards and third-party financing also allow your practice to get paid in full. But you simply are not always going to get paid in full, especially in (but certainly not limited to) this economy. While not as desirable as payment in full, collecting partial payments each month is still cash flow… and more than you’ll ever get from any non-paying accounts — or even from all of them combined!

If you don’t already offer payment plans, you should

You may have heard the old saying: “You can’t get blood from a turnip.” Medical billing professionals have long known this. And it’s likely why billing staffs helped influence the existing and increasing trend among healthcare practices toward offering payment plans to patients. If your practice is new or is struggling through the downturn, accepting monthly payments can help attract the new patients you need to come through your door. But it also helps any and all practices retain existing patients they hope to keep treating tomorrow and well into the future.

Today, medical billing departments are overrun with “sob stories” — stories that are in most cases completely true. A lot of people who want to pay and intend to pay are experiencing hardships that make it difficult for them to do so. In fact, many practices find themselves in the very same predicament; they are challenged to earn and/or collect enough to cover their bottom lines. So, surely we all understand that the inability to pay in full is very real and that, while unwanted, it is the way things are.

Periodic income is still income…and a way to keep the revenue coming

While the practice needs to get paid, its medical billing personnel will be more successful in that undertaking if they can collect the money over time from patients who cannot pay in full. But the greater success may be that your staff members do not risk offending a loyal patient (read: “customer”) who is in otherwise good standing. By accepting payments toward a balance, the practice is demonstrating that its leaders and staff understand, appreciate and care about the patient. This is no small issue, particularly given that, even before the current economic troubles, many practices already had decided to allow patients to make payments.

Simply put, payment plans have become standard practice. To not adopt this practice is to encourage patients with financial hardship to take their healthcare business to a provider who, from the patients’ perspective, cares about their situation enough to provide them a little flexibility, compassion and understanding. It’s just plainly obvious: Your practice’s best bet is to be the compassionate, understanding and flexible provider rather than the type of healthcare practice with a reputation for being none of these things.

Monthly payments are not extra work. They’re revenue you need

In some cases, a practice’s billing personnel may resist offering monthly payments (or perhaps certain forms of payment) because of the perceived difficulty or extra work involved in managing them. Collecting and processing the payments is often thought to be extra labor for billing professionals who already feel overwhelmed by their existing workload. But this is the wrong mindset, and it should be corrected with speed and all due zeal. The job of a medical practice’s billing department is to collect money. The return on the practice’s investment in medical billing labor is increased when it collects more money. Remember: The whole point here is to bring in revenue that would otherwise not be coming in.

The other key issue is the notion of challenge or difficulty. Any difficulty your billing staffers experience in managing payments plans is either wrongly perceived or genuine. And if it’s a genuine challenge, you’ve got problems. Today’s medical billing software should be completely capable of simplifying and easily managing periodic payments and multiple payment forms.

Robust and flexible handling of periodic payments is something that should unquestionably be one of your billing department’s capabilities. If not, address it immediately. It’s just too easy to do well for it to be a drag on your practice’s success.

Offer discounts for payment in full to minimize your deferred revenue

Another payment option that your practice is wise to consider is a discount for payment in full. While monthly payments (or payments made with some other frequency) are cash flow you won’t otherwise get, encouraging full payment at time of service is more cash flow. Basically, you’re giving patients a strong incentive to not opt for making periodic payments. As mentioned earlier, some patients simply won’t be able to pay in full. But some who say they can’t may find a way if it means paying less. And while a discount means less total income for the practice, it will mean more revenue in the current month.

So, while it is not only sensible but necessary to offer monthly payments, you can help prevent some accounts from becoming deferred revenue by giving them some incentive to pay now. And as with the monthly-payments options, patients will appreciate your understanding and willingness to give them a break. Some practices offer these discounts to all. But you also have the option to only offer a discount for payment in full to those patients who assert their inability to pay at time of service. You are, however, wise to decide now… and to have a standard rate of discount, because some patients are going to need it.

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