Practices often struggle to keep cashflow even and bank account balances topped off. The business side of healthcare provides constant challenges to cashflow. Claim denials, increasing patient A/R, increasing costs for supplies, labor, and leases all add to the cash crunch.
Healthcare providers are called to balance a compassionate, full-service approach to patients against the necessities of running a healthy business. It’s not easy. Add to that the doctor’s focus on patient care and the need to continually improve as a professional, and business concerns are often left on the back burner.
How can a practice improve cashflow without turning the world upside-down? Here are a few short hacks that will get you started on the right path. Call them the ABC’s for quick cashflow adjustment.
Assess Your Staff and Staffing Levels - Let’s start here because staffing is, in my opinion, the most difficult area to address when looking for cashflow benefits. One very important reality to take note of here is your office personality. There are many offices that just gel. They have the right mix of people sharing the same office ‘DNA’, so to speak. If that’s the case for your office then staffing may not be the wisest area to make changes.
If, on the other hand, you have some people who are non or low performing individuals or some individuals who are severely overburdened to the point that their performance is suffering, it may be time to make some changes. When was the last time you thought deeply about your staff and staffing needs? Could adding some help to that overburdened staff member actually save money by creating efficiencies? Could repurposing staff to other responsibilities create a win-win? Could letting someone go improve the atmosphere and cashflow of the practice?
All these questions should be considered with great thought and compassion for the individuals. Staff should be treated with the same care and concern you use with your patients. But in the end, you have a business to run, not a charity. Staff members unable to contribute to the health of your patients and smooth, profitable functioning of your practice should be reconsidered and appropriate action taken.
Bring In the Competition - Competitive bids, especially in the area of supplies and outsourced services can be a great way to leverage your practice for lower pricing. A simple way to approach this is to pick one cost item a month and send it out for bids. Even if you are satisfied with your current vendor, you need to keep them honest. Competitive pricing will do that.
You should be confident that you have the best pricing and service for rug and uniform cleaning all the way to third party billing and collections, and on to equipment and property leases. Putting these services/supplies out for bid will enable you to negotiate lower pricing and lease rates with your current vendors. It will also put you in touch with additional services/supplies you may not have known about. One more tip: Don’t sign long term contracts unless the savings significantly outpaces all competitive bids and projected price increases!
Collect Payer and Patient Balances - These two areas are most likely your best option to improve short-term cashflow. Denied claims are practice destroyers. Insurance companies are typically not your friends. Getting aggressive with denials and clean claims is a necessity in today’s world. Start with this question: How long has it been since you reviewed your payer contracts? How long has it been since a highly qualified healthcare attorney has reviewed them? I’ve seen practices with payer contracts that are years old and have never been reviewed! Shame on them!
Insurance companies spend millions on attorneys to protect their interests. They count on practices to feel pressured into whatever language they put in front of them. Don’t fall for it. At least every other year, spend the money to get the best attorney you can to review these contracts and ensure you are being treated well.
Then, hire the best consultant to scrutinize your claims process. Not one who owns or recommends a third party software or claims company, but an independent contractor who will pick your process apart and tell you what you need. Then find a company that can implement his or her suggestions.
As for patient balances - Realize that up to 35% of your revenue is coming from the patient’s pocket. This number invites a more intense look at your patient payment policies. Do you collect every co-pay? Do you use card-on-file as a means to insure you can collect co-insurance balances? Do you require self-pay patients to leave a card-on-file or deposit? Do you offer automated payment plans? Do you remind patients with text-to-pay, email-to-pay notices? Do you have a patient portal for convenient 24/7/365 payments?
All of these policies will set you up for better patient A/R. Collecting this 35% of your revenue in 60 days or less should be the norm if your average invoice is less than $200. More than that requires you have payment plans ready to offer. Plans that don’t depend on the patient sending a check, but are automatically processed against their payment card or bank account.
Whatever changes you make, be sure to inform staff, vendors, and patients of those that will affect them. Give them plenty of time to adjust to the changes and do plenty of hand holding during the transition time. You will find that changes done well will result in immediate positive impact to your cashflow.
The bottom line here is, don’t get comfortable. It’s much easier to stick with the status quo and ride the existing processes without questioning them. That can hurt your practice and in some cases is downright irresponsible. Great practice leaders regularly review processes, staff, and agreements. Small tweaks and improvements can yield great cashflow advantages.
Challenge yourself by picking one area to review next month. See if you can find some way to improve. Do that each month and track your progress. Before long you’ll find your practice is a better place to be, a place you look forward to going to, with people you look forward to being with.