Invoicing and credit control is a time-consuming task in private practice, but it is essential for obvious reasons. Yet it is the area of practice management that is most often overlooked. Jane Braithwaite reports.
Many doctors and medical secretaries are highly focused on patient care, as they should be of course, and therefore billing and collecting the money becomes the lowest priority.
It is not natural for a doctor to switch conversation with a patient from their symptoms and care plan to payment.
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.
Private consultants can sometimes struggle with the contrast between private practice and working for the NHS. It can be difficult to feel comfortable charging for your medical services after years of NHS work, which is ‘free’ to patients.
Robust credit control
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. This team will often be more aligned with the finance team and this makes total sense. But in a smaller practice, billing must be handled by the secretarial team.
It is well reported in the business world that cash flow is king, especially in the first years of a new business. 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.
Using good systems will help alleviate and automate much of the process relating to invoicing and collection. It is also key to define good processes and ensure the system is set up to support these processes.
Most private clinics will be invoicing both insurance companies and self-pay patients. They may also be invoicing embassies and legal companies.
You may already have a practice management software system in place, which could also handle billings, reminders and management accounts.
This could also make it much easier to comply with increasing requests from insurers to send billing information electronically using electronic data interchange.
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 should be using this technology, as it ensures that insurance invoices are dealt with very quickly and smoothly.
A good practice management system will also ensure that invoicing self-pay patients is simple and easy.
Invoice templates can be created with pick lists of the most commonly used items. 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.
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 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 afterwards or even following up appointments with a short email to clarify information.
If you are sending invoices to embassies and law firms for medico-legal work, these will be created in the same way as for self-pay patients, but a greater focus on chasing for payment will be needed, as these invoices often take much longer to be paid.
My advice would be to attempt to build relationships with key contacts within the organisation to smooth the way.
The next step in the invoicing process is to reconcile payments received against the invoices issued. If you are using electronic billing for insurance patients, this process will be easier for you.
Insurance companies will regularly send you remittance advice notes that need to be checked against the invoices on the system.
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.
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.
At the end of each month, a report of current debt should be produced and reviewed by key members of the team to identify and address issues early and therefore avoid that debt growing into a mountain of unpaid dues.
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 quite 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 followed.
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 you 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. 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.
You can set up a series of reminder letters to be sent by email to patients chasing 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?
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 a last resort, but one you will need to consider.
Whether you are running a large hospital or a small clinic, you have a choice whether to handle invoicing and credit management in-house or to outsource.
In-house billing and collection
Many consultants choose to handle credit control themselves when they first start out in private practice, in partnership with their medical secretary. This can be a workable solution while the practice builds, and needs to be scalable once the practice becomes busier.
You may need to employ additional members of staff to manage the workload. You may employ a medical secretary and a billing specialist who are able to work closely together but have 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.
There are a number of accountants who specialise in the private medical sector who could help with reviewing and recording your clinic procedures. And while this may seem expensive, it may turn out out to be a cost which repays the investment many times over.
Consultants and their secretaries often find chasing debts to be an uncomfortable task and not one that fits easily with the medical ethos.
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.
Most of these companies charge a percentage fee for the invoices they process and collect on behalf of your practice.
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.
The primary advantage to outsourcing billing and collection is that consultants can spend more time concentrating on developing the medical side of the business.
The downside is the additional cost, although this should be weighed against the potential savings outsourcing may provide. Consultants should also consider whether relationships with patients could be negatively impacted by moving invoicing to an external company. As always, communicating regularly with patients may help offset any problems.
Following the tips provided in this article may hopefully mean fewer debts are left to chase.
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