How to invoice your patients and ensure you get paid
Invoicing and credit control in private practice can be a time-consuming task, but it is essential for obvious reasons, and yet it is the area of practice management that is most often overlooked.
Doctors and medical secretaries are quite rightly highly focused on delivering the highest quality patient care, and therefore billing patients and collecting the money owed becomes the lowest priority.
It is not natural for a doctor to switch conversations with a patient from their symptoms and care plan to a discussion about invoices. Likewise, a medical secretary has often chosen to work in the field of healthcare due to a desire to care for patients and is less comfortable handling the billing side and chasing money.
Private consultants can sometimes struggle with the contrast between private practice and working for the NHS and it can feel uncomfortable charging for your medical services after years of NHS work, which is ‘free’ to patients.
But managing payments and debts is crucial for any business and you will not thrive or grow as a private consultant without a robust credit control strategy from the outset.
In a bigger clinic or hospital, there is often a department that handles invoicing and billing, and this team will often be more aligned with the finance team, and this makes total sense.
In a smaller practice, billing must be the responsibility of somebody within the practice team and I will refer to them here as the “billing manager”.
It is well reported in business that cash flow is king, especially in the first years of a new business and this is just as true for a consultant working in the private world as it is for a clinic or hospital.
Delays in receiving payment can put a great deal of strain on cash flow in a private medical practice and we need to ensure this is avoided.
Systems and processes
Using good systems will help alleviate and automate much of the process relating to invoicing and collection. It is also key for your billing manager to define good processes and ensure the system is set up to support these.
Invoice templates can be created by your billing manager, with pick lists of the most commonly used treatments. Invoices can be sent to patients via email or by post if preferred, but I would use email as widely as possible to reduce costs and eliminate delays.
Most private clinics will be invoicing both insurance companies and self-pay patients. They may also be invoicing embassies and legal companies.
A good practice management system (PMS) will offer the functionality needed to handle the creation of invoices, patient reminders and management accounts. Most will also integrate with a good finance system such as Xero to ease booking and accountancy for the practice.
The use of technology is imperative, particularly for invoicing insurance companies.
The PMS will also make it much easier to send invoices electronically to insurance companies, using the Healthcode system. Submitting invoices electronically will also speed up payment settlement, which should greatly help with credit control.
A good practice management system will link to Healthcode and allow electronic billing. All private doctors can use this Healthcode, and it ensures that insurance invoices are dealt with very quickly and smoothly, but there is a cost for doing so and some practices avoid using it for this reason. The alternative is to send your invoices directly to insurance companies. My instinct is that it is cheaper overall to use Healthcode when compared to the additional cost of sending and chasing invoices with each individual company.
A good practice management system will also ensure that invoicing self-pay patients is simple and easy including the option to send a payment link to patients and allow online payment.
Insurance shortfalls
Shortfalls from insurance payments will need to be dealt with in the same way as self-pay patients. It seems that many aged debts are due to a lack of transparency over insurance shortfalls.
Patients simply are not aware that their insurance will not cover the entire cost of the consultation, treatment, or procedure. This could be remedied by improving communications with patients.
It might mean incorporating a short discussion about payment in the consultation itself, reworking the written information given to patients prior to their initial appointment and/ or following up appointments with a short email to clarify information.
If you are sending invoices to embassies these will be created in the same way as for self-pay patients, but a greater focus will be needed. Prior to an appointment with a patient sponsored by an embassy, it is imperative to have a letter of guarantee from the embassy which guarantees they will cover the costs. Without this letter, getting paid will be much harder. Even with a letter of guarantee, some embassies are notoriously bad at making payments to the point that some doctors will not treat their patients.
You may also be invoicing law firms for medico-legal work, and again these are raised in the same way as a self-pay patient. Most law firms have robust payment processes in place, but your billing manager should be ready to chase if needed.
My advice with both embassies and law firms is to attempt to build relationships with key contacts within the organisations to smooth the process.
Reconciliation
The next step in the invoicing process is to reconcile payments received against the invoices issued. If you are using electronic billing via Healthcode for insurance patients, this process will be easier for your billing manager.
Insurance companies will regularly send remittance advice notes that need to be checked against the invoices on the system, but you can also view live updates via Healthcode.
If self-pay patients are paying by credit card, the payments should be marked as paid on the day payment is made. There is nothing worse than chasing a patient for payment when they have already paid.
Bankers’ Automated Clearing Services (BACS) payments will need to be reconciled with bank statements and that is a harder task than it sounds. Encourage patients to quote their invoice number when making a payment to ease the process.
Payments should be reconciled regularly so that you have an accurate picture of your current debt. I would suggest that a reconciliation is done at least weekly.
Your billing manager should circulate a monthly finance report to the practice team showing the total amount of invoices raised and invoices paid during the previous month. Most importantly the report should also track aged debt levels. It is always best to address issues early and therefore avoid aged debt growing into a significant number.
Credit control process
Each practice needs to define their credit control process. An invoice sent to an insurance company or self-pay patient may be paid promptly, but often this is not the case and the debt will need to be chased.
There will always be patients who do not pay on time and standard protocols to collect payment owed will need to be created and followed by your billing manager.
A robust monitoring system must be in place so that you can keep track of reminders sent. This can be managed within your practice management system.
A good practice management system will allow you to set up a process for chasing debt, but your billing manager will need to define the parameters. You can set up standard template letters to be sent after certain periods of time.
The time allowed may differ depending on your practice, for example, you may feel that patients should be allowed a month to pay before receiving their first reminder. This might be the case in a practice where you are seeing the patients regularly and have every confidence that they will pay at their next appointment. In another practice, you may want the reminder to be sent seven days after the initial invoice.
Reminder letters
You can set up a series of reminder letters to be sent by email to patients to chase their payment. These letter templates must be created and while the first might be a very gentle reminder, the third reminder needs to be a little sterner.
Eventually, someone will need to pick up the phone to chase payment and that is not a task liked by most. If a patient is ignoring your letters, then a phone call may be just what is needed to prompt payment.
Again, you need to decide at what stage this occurs. Do you wait one month or three months before taking such a step? What feels right in your practice?
Debt collection
Thankfully, most patients do pay what is owed, but there will be a small percentage who ignore emails, letters, and phone calls.
You need to be clear on how you will handle this. Are you happy to accept a certain percentage of non-payment and simply write this off? Or do you want to take this further and involve a debt collection agency? Obviously, this is the last resort, but one you will need to consider. Whatever you decide, it needs to be stated in your terms and conditions provided to your patient when they book their first appointment.
In-house billing and collection
Whether you are running a large hospital or a small clinic, you have a choice whether to manage invoicing and credit management in-house or to outsource to a specialist company.
Many consultants choose to handle invoicing themselves when they first start out in private practice, in partnership with their medical secretary. This can be a workable solution in the earliest stage, while the practice builds, but care needs to be taken to ensure it is scalable once the practice becomes busier.
You may need to employ additional members of staff to manage the invoicing workload. You may employ a medical secretary and a billing manager who are able to work closely together, but both have clearly defined roles. As always, effective, and clear procedures need to be in place from the very start.
It is imperative that administrative and financial processes are reviewed regularly and documented to avoid key person dependency. You do not want to find yourself in a situation where someone is sick and no one else knows how the systems and processes work.
Consultants and their secretaries often find chasing debts to be an uncomfortable task and not one that fits easily within the culture of a healthcare company.
You will need to ensure that you and your team stay informed about technological advances so that you and your patients can benefit from them.
On the positive side, handling invoicing in-house means that you have complete control and can feel comfortable that every communication with your patients is made by a member of your team.
Outsourcing invoicing
Many consultants, clinics and hospitals engage an external specialist billing company to manage their invoicing and payment on their behalf. Most of these companies charge a percentage fee for the invoices they process and collect on your behalf. They can also chase aged debts and provide a variety of management reports such as insurance breakdowns and bank reconciliation information.
Some firms have their own custom software for this, while others integrate with industry-standard practice management software. It is always better to use standard systems to avoid being tied to one company long-term. It is good practice to keep your options open.
The primary advantage of outsourcing billing and collection is that consultants can spend more time concentrating on their patients and developing the medical side of the business. It is also hugely reassuring to know that such an important aspect of your practice is managed by a team with expertise and the value of this should not be underestimated.
The downside is the additional cost, although this should be weighed against the potential savings outsourcing may provide. For most organisations the cost is less than the money that can be lost due to bad debt recovery.
Summary
Following the tips provided in this article will hopefully mean you are able to establish an excellent invoicing and credit control function for your practice resulting in fewer debts.
If you need any advice, please do contact the team at Designed Medical.