Is your private practice struggling with aged debt?

Running a successful private practice requires a clear understanding and effective management of your aged debt. Efficient medical debt management has many benefits including ensuring your practice is profitable. Vicky Garbett, Designated Finance Director, explains the importance of managing aged debt in your healthcare private practice.

What is aged debt?

Aged debt refers to a measurement of the total amount of debt/money owed to your business by your customers/patients over a period of time. Essentially, it shows how much of your sales revenue is tied up in accounts receivable and how long those amounts have been outstanding. This can help you understand the financial health of your practice.

An aged debtors report, also known as an ageing report, provides a detailed breakdown of all outstanding sales invoices, minus any credit notes that have been issued to your patients, and not yet refunded.

These reports typically give you information by patient, service type, and date. This categorisation helps you pinpoint which debts are overdue and by how long, allowing you to take appropriate action to collect these debts.

Why is managing aged debt so important?

The aged debtors report provides you with an excellent insight into the financial health of your practice. You can get an understanding of average payment times, and any long-term debt issues that may need to be written off. If you have recently implemented changes in your billing, payment plans or collection processes you can use your aged debtor report to evaluate the effectiveness of those changes.

By analysing this report, you can identify trends in payment behaviour, recognise chronic late payers, and make informed decisions about financial assistance or taking steps to improve medical debt collections. It also aids in maintaining a healthy cash flow, which is vital for meeting your own financial obligations and ensuring the smooth operation of your practice or business.

Keeping the aged debt under control will improve the financial health of your practice. Focusing on medical debt management leads to good cashflow, which will lead to increased profitability!

How can Designated Medical help?

Our Designated Medical billing team is accountancy-led, which sets us apart and we are proactive when it comes to aged debt. We believe this is your practice and your finances, and you need to be made aware of any issues.

That is why we created our monthly management pack that every billing client receives, and in which we offer advice on the following:

  • Invoices raised in month v last month
  • Cash collected in month v last month
  • Detailed aged debt breakdown with commentary
  • Breakdown between self-pay & insurance (if applicable)

We work hard to ensure all invoices are paid but if we feel debt payments are not going to be settled, we take the opportunity to advise you and gain your authority to write the amount off. Being accountancy-led, we understand that if bad debts are provided for and written off when agreed they are not subject to taxation as they were not collected.

What do our clients think?

One of our clients, Andrew Ramwell, a General and Colorectal Surgeon, who has benefited from our medical debt management services said:

“The team at Designated has collected £30,000 of the bad debt which is 87% of the total owed. My billing is now 100% up to date and I receive weekly status reports. I am delighted and would recommend Designated services to everyone.”

Read the full client case study.

The Designated Medical Accountancy team have lots more practical tips to improve the medical debt management and financial performance of your private practice, contact Vicky today to find out more.