As demand for private healthcare increases, what can you do to ensure your practice is ready to welcome more insured and self-pay patients and provide a seamless service? In this series, Product and Marketing Liaison and former practice manager, Desné Marston, breaks down the patient journey to look at how the admin side supports the delivery of great care and explains how we can help.
Credit control and collections
The first step to getting paid is sending accurate invoices on time, which I covered last time, but of course that’s not the end of the matter. While most insurers (PMIs) and self-pay patients settle their accounts quickly, there’ll always be a few that need to be chased up and in some cases you’ll need to invoice the patient for a shortfall that hasn’t been covered by their insurance policy.
It’s therefore important to have a foolproof system for managing payments so that you can monitor your finances, see exactly what’s outstanding and then collect what you’re owed. That’s what I’m going to cover this time.
Managing payments
It’s essential to allocate payments correctly as soon as they arrive so check your practice bank account against any insurer remittance advices and expected transactions daily to keep on top of receipts. As well as knowing how much money you have coming into your practice business (your cash inflow), you can also see what invoices have been settled and what haven’t. It’s difficult to say what’s worse – chasing someone for an invoice they’ve already paid or not realising that an invoice is outstanding until it’s much too late.
Every invoice should have a unique reference number so you can keep track of it. The invoice number will usually be automatically generated by your practice management system (although if you’re still running a manual system, it’s another thing you need to consider). When you receive a remittance advice it should include the invoice number, along with other details, so you can correctly allocate the payment in your records.
It should be quite straightforward to match a single invoice against your outstanding accounts. However, things can get more complicated when a transaction covers several invoices (a bulk payment). That’s when it helps to have a practice management system like ePractice with patient account features. For example, Lite and Pro users can record bulk payment transactions and then see a list of outstanding invoices for that payor so it’s easy to split and allocate the payment. Where PMIs send electronic remittances (AXA Health, Aviva and Bupa), we can take that a step further with auto-allocation. This means the system analyses the remittance advice and generates a summary that automatically assigns the payment to the relevant invoices. Users can then confirm or make changes. You can sign-up to our free online tutorial with Healthcode Academy to find out more about payments (Module 3 or Bite-size modules 3A and 3B).
Dealing with shortfalls
Another aspect of payment allocation which can trip practices up is when the PMI hasn’t paid the invoice in full. This means the patient/policy holder is liable for the shortfall but as I’ve said before, it’s important to cover this possibility in your T&Cs so the patient knows what’ll happen.
When a shortfall occurs, you’ll need to reallocate the debt from the insurer to the relevant patient, create an invoice for the balance owed and a short letter explaining the reallocation. The sooner you send the shortfall invoice and letter the better so it makes more sense to use the Online Payments service with patientzone that I described in my invoicing blog. This enables you to send branded electronic invoices, shortfall notifications and reminders to patients with a link to pay securely online.
Once a payment has been received, ePractice will automatically update the outstanding invoice in around 30 minutes to show this. You can also set your patientzone account to send an email or text confirming the payment.
Credit control
It doesn’t matter how many patients you treat, if you don’t get paid then your practice won’t be sustainable. Bad debt is actually one of the most common reasons for businesses to run into cashflow problems and poor cashflow is one of the commonest causes of insolvency, especially for SMEs. Put simply, your practice needs an efficient credit control process to collect what you’re owed in good time and prevent losses due to unpaid invoices.
It makes sense to have someone in your practice with responsibility for credit control and collections – many businesses employ an Accounts Manager – but you could also outsource the task. Outsourcing to a trusted third-party specialist, such as a medical billing company, also makes sense if you want to preserve your patient-practice relationship or find the prospect of chasing a patient for money too awkward.
If you’re managing collections in-house, it’s essential to know the status of all invoices and follow these up as soon as the due date passes. An accounting tool called aged debt analysis is really useful to know when to start chasing as it shows how much each payor owes, segmented into aged debt bands (eg 31 – 60 days, 61 – 90 days outstanding etc). ePractice Pro subscriptions include credit control and aged debt analysis tools to help you keep on top of your practice finances. You can set aged debt bands to suit you, click to find detailed payor information and automate the generation of reminder letters in line with your preferred timescales.
Chasing payments
With PMIs, you’ll generally be made aware if there’s a query at an early stage so you can pick this up with them directly by phone (or use our Secure Messaging service). With late payors, it’s usually best to start with a polite reminder letter, reiterating how much they owe, your T&Cs and explaining how to settle their invoice. They’ll always contact you directly if they have any concerns. If you use our Online Payments, you can send these shortfall letters and payment reminders electronically.
If your first letter doesn’t get the desired response, you’ll need to up the ante. It’s always worth calling the patient if you have their number and feel comfortable about doing this. Otherwise, it’s usual to send two standard reminders and then the final reminder. Final payment reminders typically include a warning that the business will take legal action if the debt isn’t paid by a specific date. Ultimately, it’s up to you whether to take things further or write off the debt – considering factors like how strongly you feel, the amount owed, the time and the cost involved but I’d recommend getting legal advice before making a decision.
While you can maximise the chances of prompt payment by clearly stating your payment terms on invoices and making it easy to pay, it’s just as important to be pro-active about managing payment allocation so you know how much money you have coming into your practice while effective credit control ensures that you’re able to collect every pound that you earn.
Discover More
If you want to learn more about how we can help you manage this and other aspects of the patient journey contact our Business Development team. If you’re already an ePractice user and want to explore the system, check out our guides or book a free 1-2-1 tutorial with one of our friendly experts at the Healthcode Academy.
About Desné
Desné worked in the private healthcare sector at various sites in London for over 30 years. She has extensive experience and skills relating to all areas of practice administration, having been a practice manager from the early 90s to 2019 when she joined Healthcode.
Next time – Financial reporting
