"The fastest way to reduce overhead is to increase collections," said James M. Crandall, CPA with Cardiovascular Associates. And the best way to increase collections is to communicate with the patient, so they pay their portion at the time of the service.
If they want to get paid, Crandall said, practices must be very clear with patients from the time they set the appointment. "We do a poor job of letting patients know what is expected of them. They expect quality healthcare, and in exchange, physicians should expect payment."
The critical time for explaining expectations about payment is before patients arrive in the door. Practices can't be shy. "Contact the patient prior to arrival, and if they have a co-pay, confirm that they will be expected to pay it at that time," Crandall said.
Once they're in the door, it's too late. "Often, when it comes time to pay, you'll hear, 'Oh, I forgot my checkbook,'" Crandall said. "But if they've been told up front about the payment requirement and then show up without it, the practice might consider saying that they'd be glad to reschedule." He said this option needs to be decided on a case-by-case basis, as patient care always comes first, but many practices are doing it now. "It's amazing how a checkbook or credit card is suddenly found when they think they might not see the physician that day."
If someone doesn't pay, practices may think they're only losing a $20 co-pay, and it's not worth the effort to collect at the time of service. "But physicians should analyze their accounts receivable and see how many co-pays and payments they're not collecting to see if they have problem," Crandall said. For example, if the physicians see 30 patients a day, and a fourth of the patients don't pay their $20 co-pay, it totals $35,000 a year.
Collection costs, such as for statements, postage and follow-up, diminish payments and can easily surpass a co-pay amount. "If they walk out without paying, it may not even be worth trying to bill," Crandall said.
Whatever procedures the practice determines to put in place to induce payment at the time of service, they should be developed into a policy that staff can uniformly follow. Because, as Crandall said, "physicians can't continue to give away their services."
Tap New Revenue Streams
Every administrator and physician daydreams about ways to replace revenue, especially with reimbursements shrinking. "Or I hope they think about it," said Randy Hammond, CPA and CEO of Urgent Care, PC in Pelham and Premier Medical.
Hammond has thought about it. His first new revenue source stems from a recently released IV treatment, called Reclast, for women with osteoporosis. Rather than a monthly pill, the drug is administered intravenously once a year upon a doctor's referral to an approved administration point. Boniva has released a medication requiring quarterly IV.
"So practices can apply to the pharmaceutical companies and become an administration point, and that can generate extra revenue," Hammond said. He adds that it also stimulates patients to return for other things, once they have experienced your facility.
Cosmetic surgery offers another new avenue for revenue. "They've made the lasers easier to use, so the family physician and their nurses can safely administer treatments for things like skin blemishes and hair removal," Hammond said.
Hammond's urgent care clinic is exploring this potential. He estimates the equipment will run $75,000 to $150,000. "What we don't know is how big the market is," he said. "But we think we could recoup our investment in 36 months." And again, that would drive more patients to the clinic who can't find that service in their area.
The third revenue-generating concept relies on marketing to a patient niche that Hammond noted as being overlooked. "Many men don't have a family physician," he said. Women start going regularly to a doctor early in their lives, because of the ob/gyn situation. "But unless they have a real problem, men do not have a tendency to go to the doctor."
Hammond wants men to feel that their practice understands the day-today problems of the male. "We've not done this yet, but we want the clinic to become a source for men where they feel comfortable coming to us for their specific medical needs. We want to be their physician."
Being an urgent care clinic might appeal to men, because no appointments are taken. "We want guys to start thinking, 'maybe I could go get this situation taken care of that I've been putting off,'" said Hammond, who envisions "something like every Thursday as 'Men Day" at the clinic, so any guy who wants to come in, should come in."
