Streamlining Collections for Physicians Practice Sustainability

Businesswoman using technologies at desk in home office

“Traditionally, 20 percent to 25 percent of our accounts receivable (A/R) was patient-owed A/R. Now, it’s 40 percent or higher,” says Brian Yeaman, MD,


In today’s increasingly consumer-directed healthcare environment, patients are bearing more responsibility for the cost of care — to the tune of $352 billion in 20161 — and practices are paying a hefty portion of the price.

“Traditionally, 20 percent to 25 percent of our accounts receivable (A/R) was patient-owed A/R. Now, it’s 40 percent or higher,” says Brian Yeaman, MD, an independent family physician in Norman, Oklahoma. “And that percentage of collections, and thus revenue, is so much harder to get.”

He’s not alone. According to Linda Glidewell, vice president of consumer payment solutions for Change Healthcare, patients pay three times slower than health plans and it costs twice as much to collect those payments.

Fortunately, there are numerous strategies practices can employ to rein in collections while preserving the physician-patient relationship. Success in implementing them, however, requires physicians to rethink their approach to sustaining the business side of their practices.

“Because we often don’t have extra people to have these crucial conversations with patients, we have to cross-train all of our employees on money.”

- Elizabeth Woodcock, MBA, FACMPE, CPC
Woodcock & Associates

Educate Patients

The leading way practices can improve patient collections (as well as patient satisfaction) is to tell patients what they can expect to owe as early and clearly as possible, says Laurie Morgan, MBA, a senior consultant with California-based Capko & Morgan and author of Management Rx. “Preparation is tool number one,” she says. “Patients are going to get the bill either way; so the more they know upfront, the less upset, resentful, or simply surprised they’re going to be that they’re getting that bill.”

But there is a right and wrong way to set those expectations with patients, notes Elizabeth Woodcock, MBA, FACMPE, CPC, principal of Atlantabased consulting firm Woodcock & Associates. The correct way emphasizes patient engagement.

For example, instead of telling a patient, “Here is what this procedure is going to cost you. Give us a $1,000 deposit,” Woodcock recommends engaging patients in a conversation to let them know what the estimate is and asking whether they have any questions.

Educate Employees

Staff training in conducting these conversations is crucial, experts agree. And the first lesson should remind employees that financial discussions require compassion and empathy, says Glidewell.

“It’s about putting themselves in patients’ shoes, and thinking about the experiences that were positive or negative for them as patients and how those experiences impacted their impression of the overall encounter,” she says.

If the financial experiences sours that perspective, the consequences can extend beyond not collecting the balance or even losing the patient. “They may go online and leave a negative review,” warns Morgan.

In addition to using a human touch, employees obviously must be savvy about the practice’s billing and revenue cycle. Ideally, every employee who interacts with patients should be equipped to handle financial discussions, adds Woodcock.

“Historically, practices have bifurcated scheduling and billing,” she says. “Because we often don’t have extra people to have these crucial conversations with patients, we have to cross-train all of our employees on money.”

However, even with the best intentions, solid cost estimates can be elusive for practices, as payer policies vary wildly, treatment plans often evolve, and charges can come from several providers of care or facilities. “A really good estimate may not exist, due to the way we price services in healthcare, but it is possible to let patients know they’ll be charged for professional fee services, for example, and to expect a bill from X, Y, or Z,” she says.

Woodcock also recommends urging patients to call their insurance company to ask what they’ll likely pay out of pocket for a given procedure. “This transfers responsibility to the payer,” Woodcock says. “That’s important because the practice often gets caught in the middle between the patient and the payer.”

Start with Scheduling

The best time to collect patients’ financial obligations is when they’re in the office, experts agree.

Success in point-of-service (and back-end billing) begins with the scheduling process. This includes performing the financial clearance during the call, says Woodcock. “The scheduling process has to be intertwined with the registration process. We want to ensure that we don’t book appointments and then go, ‘Oh, look. The patient didn’t really have Humana,’” she says.

The scheduling call is also the practice’s first opportunity to discuss out-of-pocket costs. In some cases, this might be a simple reminder that a copay is due at the time of service. For patients with high deductibles, schedulers should notify them of their obligation to pay for care and perhaps assist them in structuring payment plans upfront.

While practices may fear that getting into finances so early may give an impression that they’re “money grubbing,” Woodcock assures that it’s quite the opposite. “It is a vital patient satisfaction initiative.”

For example, consider a maternity patient with a $2,500 deductible. “That’s a very large expense on top of what already will be a huge economic shift,” says Morgan. “Preparing that patient gives them the chance to work with you to pay that off during the course of their pregnancy or on a payment plan after delivery, so it doesn’t come as a single gargantuan expense they’re probably not going to be able to pay,” she says.

Even for lower amounts, it’s a best practice to inform patients that they may receive a bill from the practice, as a condition of their health plan, and that it will be legitimate, says Morgan.

“If a patient is not prepared, he or she will potentially assume the bill is in error, and may waste a lot of staff time to call and complain.”

Additionally, practices can use their websites to help educate patients about their financial policies, as well as often-confusing health-plan jargon, such as explanation of benefits, adjudication, coinsurance, and so on, Morgan says.

Revamp Registration

“The number one thing I did was revamp the registration desk,” says Yeaman, a family physician. “Traditionally in healthcare, we’ve neglected the registration desk. That has to change. This is now a critical position that must be done precisely right. Our margins are too slim to afford any errors there.”

In the past, he explains, staff would collect all of a patient’s insurance and demographic information at registration, but were less diligent about asking about changes.

“All the while, those have been critical elements,” he notes. “There’s been a lot of billing delayed over many years because we had the wrong insurance information—and it’s because we weren’t diligent in our registration process.”

Another update to Yeaman’s registration process is that staff now ask patients during check-in to pay any outstanding balances rather than billing them later.

“Then, of course, we’ve been more focused on collecting copays,” he says.

Consider Kiosks

Technological solutions can augment these efforts. Placing kiosks similar to those found in airports, for example, can offer patients convenience, time savings, and privacy.

When checking in using a kiosk, patients enter and update their own demographic information, freeing up staff time as well, notes Morgan. And the abilities for the patient to swipe a credit card or set up a payment plan easily and privately can be big patient satisfiers. “Patients don’t have to be standing at the front desk with an employee sort of confiding to them about their balance and setting up payment terms verbally,” she notes. “These tools give the patient more of a feeling of control.”

With the same functionalities, tablets can be effective collections tools as well, notes Woodcock, an expert in practice operations and revenue-cycle management. Another advantage of tablets is that they don’t require the real estate that kiosks do, she says, but it is important that any electronic tool is user friendly.

In theory, staff will be more freed up to help walk patients through using such devices for the first time, notes Morgan.

However, patients should still have the option to interact with a person at the front desk, says Yeaman. “When you’re sick, the last thing you want to do is go wrestle a computer,” he says.

“Healthcare is such a personal business and such a trust business,” the solo physician says. “Self-service is more challenging in healthcare compared to other industries because patients come to the front desk with such a myriad of questions and concerns, so from a patient satisfaction standpoint, electronic check-in or check-out is not for everyone.”

Bolster Outreach

Once a patient leaves the office, it’s substantially more difficult to collect, but results are relative to the practice’s effort. In a poll2 conducted by the Medical Group Management Association (MGMA) in 2017, 43 percent of 1,043 respondents said they wait more than 91-120 days following service before turning an account over to outside collections, and another 32 percent wait more than 120 days. Only 2 percent said they take action after 60 days.

Once accounts are turned over to collections, MGMA data shows that practices collect just $15.77 of every $100 owed.

So it’s of little surprise that in the “old days” before widespread high deductibles, collecting 50 percent of patient-owed revenue was historically considered pretty good, says Yeaman. “Now that it’s 40 percent of our A/R, it’s a completely different game. We can’t just passively send the patient a statement every 30 days.”

Now, once accounts get past 30 days, the practice actively pursues those collections with any kind of messaging the patient has agreed to, including text messages, emails, and phone calls.

“They’re not exactly collection calls, but more ‘encouragement to pay’ calls,” he says. In fact, Yeaman’s mother, who is retired, comes to the office to make many of those calls on the practice’s behalf. “She introduces herself as Brenda Yeaman. You’d be amazed at how successful she is at collecting, because it’s a warm, friendly voice and the message is personalized.”

One key to communicating with patients in any manner is clarity, notes Change Healthcare’s Glidewell. In addition to using layman’s terms in written and verbal messages, invoices should be uncluttered and easy to read.

“The look and feel of a patient statement affects how a person responds to it,” she says. In particular, she suggests putting information about payment options front and center. “Personally, I don’t want to write checks—or go hunting all over a bill to find out how to pay online,” she says. “Don’t bury payment options on the back of the bill in small print.”

Portal Limitations

While patient portals may appear to offer a comprehensive solution to communication with patients about their financial obligations, allow them to view their statements, and collect payment, experts suggest cautious enthusiasm.

“What I’ve found is that many practices have a fairly good portal adoption rate—meaning we have patients who are registered for them—but an abysmal utilization rate,” says Woodcock. In other words, even if most of a practice’s patients are “signed up” for a portal, it’s not a great collection tool if only 2 percent are actually using it.

Yeaman agrees. “Our patients can view their statements online, but we’ve not stopped sending traditional statements because we don’t know what settings patients have on their portals or how often they check them. And notices can easily get dumped into a patient’s junk email,” he says.

Paying via portal may be more appealing to patients if they are reassured that the system is secure, notes Glidewell. And the more connected systems are, the better. For instance, she recommends portals offer the ability to manage all bills, such as for lab, office visit, or procedures, in one place. “In addition to a consolidated view, the ability to link other family members helps minimize the amount of times a patient has to log in to pay for services.”

Credit Card on File

Taking a cue from the hotel industry, credit card on file programs have increased in popularity among physician practices. These programs allow a practice to charge the patient’s credit card on a pre-determined schedule rather than relying on the patient to remit payment.

However, it’s not acceptable to store credit card numbers in a locked file or enter them into the practice management system, warns Morgan. “It’s essential to check with your vendor to ensure you are using an encrypted PCI-compliant solution,” she says. If your vendor does not offer this solution, it may be available from a third party such as a clearinghouse, she adds.

Practices may also consider accepting alternative payment mechanisms, such as pre-paid Visa gift cards, to patients who are not comfortable using their personal credit cards in this manner, says Woodcock.

Allowing patients to make mobile payments is another way experts recommend highly to make paying fast and easy for patients.

“You want to make it easy for the patient to pay whenever they have a moment to do it,” says Morgan.

“To pay by a credit card should not require a call during business hours. That’s more annoying to the patient and also takes up staff time,” she says.

Physician and Outsourced Partner Roles

Depending on the size of a practice, physicians have varying degrees of involvement in the revenue cycle. But even in large groups where dedicated staff handle billing and collections, physicians should be in the know, says Woodcock. “Ultimately, it’s his or her income that’s affected. We have to engage our business owners and not keep them in the dark as to why their revenue may be going down,” she says.

As a solo physician with one nurse practitioner, Yeaman is all-too aware of the dangers of unpaid patient balances. Before patient responsibility represented more than a third of his A/R, he says he never looked at patient balances or asked his staff to let him know if a patient had a high balance. But as patients have become a predominant payer, Yeaman now asks staff to inform him if someone has an exceptionally high balance or is more than 120 days behind so that he can address it.

“I don’t deny service, of course, but it’s just a reality of where we are. And especially as a small, independent practice, we can only work for free for so long,” he says. “We have to focus on the business side just as keenly as the clinical. Otherwise, we’re all 30 days from being upside down in terms of cash flow—and it’s never quite been like that.”

That said, it’s often wise for practices to recruit extra help. “Most practices want to focus on the clinical aspects of what they do, and they can and do often tap someone else who is experienced in having those payment channels already built out,” says Glidewell. “Finding a good partner to help practices through the process is important.”

To learn more about how a partner like Change Healthcare can help your practice streamline collections and improve overall efficiency, visit solutions/revenue-performance-advisor or call 866-817-3813.

1 "National Health Expenditures 2016 Highlights," CMS.
2 "Most Practices Wait to Send an Account to Collections," MGMA.

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