By Brian M. Cloud, JD, MBA
How can I streamline billing and collection efforts so my medical practice is profitable? Medical practices need to be concerned with the bottom-line, and therefore need to make sure their business processes are streamlined. Three of the most effective processes to implement, whether the practice is established or new, are to develop a credit application in the patient forms, clearly communicate the payment terms upfront, and utilize a collection agency or attorney to reduce unpaid account receivables.
For an established medical practice, this could look like implementing new forms that focus on gathering information about a patient's financial standing through credit applications or hiring an attorney or collection agency to help them with their collection efforts. A new practice can reduce the need for process improvements later by putting these same systems in place before it opens. A medical practice that has these systems in place will see a higher return of profit since they will have more legal leverage and control due to proper documentation and representation. While medical practices need to concentrate their efforts on offering quality patient care, it is important that, like any business, they prioritize proper business controls.
Develop a Credit Application in Your Patient Forms
From patient intake to medical records, medical practices deal with a host of forms that inform them on how to proceed with patient care and billing. One of the simple changes a practice can make to its billing process is developing a credit application as part of the patient intake forms. Within a credit application, the practice can gather critical patient information including name, address, phone number of applicants, responsible party, place of employment, bank account information, and social security number. The credit application should also contain clauses that allow the practice to add interest and collection costs/attorney fees to the amount owed by the patient. The credit application acts as another tool that creates leverage over the patient should it become necessary to collect on deliquiate medical bills in the future. While this credit application cannot be applied to patients who are already receiving care, a practice can create and implement this form with future patients. A medical practice should consider using legal counsel to review its business forms, like the credit application, to ensure they are drafted effectively and with the appropriate legal verbiage.
Communicating Payment Terms Upfront
Communicating the medical practice’s payment terms in intake forms can save the practice from unnecessary billing struggles. Key elements to include are clear payment expectations for the patient’s service including billing due dates and any potential late fees the patient could incur. From the credit application’s clauses, the patient will also be informed ahead of time of additional interest and collection costs/attorney fees they could incur upon past due payment of their bill.
In a setting where a patient might have bills from separate doctors or specialists, the patient should be made aware of each payment expectation, especially if they vary between doctors. For example, in a situation where a patient requires surgery that needs anesthesia, they will receive care from the surgeon as well as an anesthesiologist. Both doctors will bill for their services, and the patient should be aware of the payment expectations for both sets of care upfront. Often, patients will experience delays in receiving invoices from the practice due to insurance processing, but if the delay is communicated in the forms, this will ease the burden on the practice.
In addition to clear payment terms, offering discounts or other early payment incentives can aid in on-time billing that benefits both the practice and the client.
Utilize an Attorney or Collection Agency
When a bill goes past due, a medical practice can use a collection agency or law firm to assist with its collection efforts. A collection agency or law firm, like Cloud & Willis, LLC, will utilize the credit application documentation as leverage to resolve the past due invoices with patients. A collection agency or attorney can work on behalf of the medical practice by sending out demand letters and calling patients. They can also leverage technology like scoring modules and skip tracing to help with collection efforts. If court action is necessary, an attorney can represent the practice through the build-in fees and court costs listed in the patient’s credit application clauses, reducing the medical practice’s legal expenses.
Medical practices should always be looking for areas in their business process where they can make improvements. Achieving a profitable medical practice will not only secure the practice's future but also allow it to take on new patients and continue serving the community.
This article is intended to provide the reader with a unique overview of and practical guidance for strengthening a medical practice’s bottom line using a credit application in your medical practice and should not be construed upon and relied upon as legal advice. If you have any questions concerning particular situations or specific legal issues, please contact our firm through our website: www.cloudwillis.com.
Brian Cloud is the Managing Partner of Cloud & Willis, LLC.
