Have you ever gone to the grocery store and been disappointed to find less than fresh fruits or vegetables? Usually happens to me late in the week. While I'm taking my time getting to the grocery store other folks are getting there early and buying the fruits and veggies fresh off the truck. They get the best bang for their buck.
The lonely fruits and veggies left without a home just sit in the bins losing their value with each passing day; until they reach the point that no one will buy them regardless of price. They're worth nothing, nada, zip, nothing. So they just get tossed in the trash bin. So what's my point? If you're a doctor with uncollected patient accounts or unpaid claims, the outstanding monies are just like the spoiling fruits and veggies sitting in a grocery store bin; losing value until the uncollected monies are written off ? the grocery store equivalent of getting tossed in the trash bin.
Make no mistake ? uncollected money goes stale pretty quick. Here's an example. The easiest way for a doctor or any other health care professional to increase their revenues by percentage points is to simply collect co-pays from each and every patient that walks through their doors. Consider the costs involved in collecting a $20 co pay ? after they've been treated and walk out the door. Let's say the $20 sits in receivables for six months.
By that time, based on the future value of money, those twenty dollars are now worth nineteen. The value of that co pay has dropped 5%. The cost of time and materials for the three statements your staff sent to the patient add an additional cost of $1.80. Now that $20 co pay is only worth $17.
20 ? 86% of the original value. Odds are by this time the patient has no intent of ever paying the bill. The only other option is turning the account over to a collection agency. The agency's fee will be 30% of the monies collected so the value of that $20 co pay drops by $6 to $11.20; or 56% of the original value.
Apply this example to a health care professional's entire outstanding receivables and you'll see that he/she can significantly impact their bottom line simply by instituting a policy that requires collecting the co pay of each and every patient at the time services are rendered.
The author, David George, is an expert in electronic medical billing services and account receivable management. He specializes in significantly improving the cashflow, revenues and profitability of physician practices accross the country. David also authors the Start a Medical Billing Service blog offering tips, tricks and advice for medical billing and coding entrepreneurs.