growing a healthy practice: top 10 ways to increase cash flow and reduce past due accounts presented...

Growing a Healthy Practice:

Top 10 Ways to Increase Cash Flow and Reduce Past Due Accounts

Presented by:

Tracy L. SpearsNational Consultant – Medical/Healthcare Industry

Transworld Systems Inc. provider of

GreenFlagSM Profit Recovery Services An MGMA AdminiServe Partner

November 18, 2008

Tracy Spears Ms. Tracy Spears is a National Consultant for the

Medical/Healthcare Industry and Director of Association

Business Development for Transworld Systems. She

has been consulting with Transworld for nearly 20 years,

focusing on health care and medical practices. Ms.

Spears presented to the Oklahoma State MGMA

Meeting in October 2007 as well as held an

MGMA member web cast in April of 2008. She recently

presented “10 Ways to Maximize Effective Collections” at

the National MGMA Annual Conference in San Diego,

CA. and was instrumental in developing an A/R software

interface for medical practices to increase cash flow and

reduce workload.

Objectives of Presentation Develop internal strategies for effectively

collecting money Help staff learn what to say to patients in

order to motivate them to pay Understand what options are available

when accounts are overdue Know when and how to use those options

Collection Challenges Facing Today’s Practices

Slow paying patients Slow paying insurance carriers Understaffed Trying to work all accounts

systematically, including small balances Familiarity with collection laws

4 Reasons to Collect

1. Accounts depreciate and get harder to collect

2. Complaints increase with time3. Further medical treatments stop

because patient avoids doctor 4. Stressful for the staff and the

patient

Facts about Collections Most medical practices wait until an

account is 180 days past due before they give it to an agency for collection

Typical In-House Collection Efforts

Day 30 Day 60 Day 90 Day 120 Day 150 Statement Statement Statement

Letter #1 Phone Calls

Statement Letter #2 Phone Calls

Statement Letter #3 Phone Calls

*According to the Dartnell Institute, the average cost of working an account internally over a six month is $31.60 per account.

Day 180 Intensive Telephone Contact and/or Legal Action at a cost of 25-50% of recovered amounts.

-

Facts about Collections

It costs a practice $31.60 to collect an account after it’s 60 days past due*

90% of the collections budget is spent to collect 10% of past due accounts

Delinquent accounts depreciate ½% percent per day**

* MGMA resource center**U.S. Department of Commerce study of depreciation of accounts held in-house.

Start Early – Recover More

Facts about Collections There are over 6,000 collection agencies

operating the United States


The Fair Debt Collection Practices Act (FDCPA), the primary federal law regulating third party collection agencies, which was enacted in 1977 with the support of ACA, is designed to help protect consumers from unfair and abusive collection practices


Average cost for a traditional agency is 30%

According to the ACA International 2008 figures, the average recovery rate for collection agencies is 13.8%

The true cost of collections is the amount of money that is not recovered

* ACA International 2008 Survey


Smith’s Practice $50,000 22% recovery rate Collect $11,000 Agency gets $4,510 Practice gets $6,490

Jones’s Practice $50,000 10.8 % recovery rate Collect $5,400 Agency gets $1,350 Practice gets $4,050

Additional Net Income: $2,440

Facts about Collections Most money collected by a third party is

from the first letter sent to the patient! Working an account internally via phone,

has a 10% chance that the call will get through to the patient

90% of malpractice suits are with patients who owe money (hold harmless agreement)

Top 10 Ways to Increase Cash Flow and Reduce Past Due

Accounts

1. Have a Defined Credit and Collection Policy

Policy gives staff a detailed document that they can stand behind

What should be included in your policy?

Initial office visit or upon admission - What Payment is required

Allowable forms of payment: cash, check, money order, and charge card

Broken appointment charge and policy Patient is responsible for total charge. We do

not look to a third party for payment Medicare - Medicaid, what policy. Established

patients only?


Office policy on insurance assignment. Full fee due now or just estimated deductible?

Whether or not service fee is charged for filling out more than one insurance form and, if so how much? If doctor "participates", how are those programs handled differently?


Maximum number of payments allowed? Promissory notes or Truth in Lending

forms? Interest, billing or service charge - rate

and when applied

2. Make Monthly Statements Effective

Send statements promptly and regularly Do not put aging date at the bottom of the

statement

Statement With Aging Dates

Make Monthly Statements Effective

Do put a due date on the statement

Statement With Due Date

8/1/2008

3. Admit & Correct Your Mistakes

If patient has not paid because there is a billing error, admit it and correct it quickly

4. Contact Overdue Accounts More Frequently

Contact late paying patients every 10-14 days

5. Use “Address Service Requested”

Put address service requested on all correspondence sent to patients

6. Use Your Aging Sheet, Not Your Feelings

Stand by your policy

7. Make Sure Your Staff is Well Trained

Even experienced staff members can get jaded when dealing with past due accounts

Qualified Staff

How to Talk to Patients: Asking for Payment

What you should not say: “How much can you pay?” “When can you pay?” “Can you pay something?”


What you should say: “How much are you short?” “Will you be in today or tomorrow?” “Will you be paying by cash, check or

credit card?”

How to Talk to Patients:Asking for Payment

Empathize with patient’s situation Remind them of their obligation to pay Get commitment for payment


Convert outstanding balance to a time frame

Arrange for bi-monthly payment arrangements

8. Know the Warning Signs of Troubled Accounts

Account is 45-60 days past due Phone has been disconnected or changed

to “unlisted” Partial payments are smaller and sent with

less regularity Patient says he or she won’t pay

9. Know Your Collection Options

Status quo Write the account off Attorney Small Claims Court Use a third party

What Are Your Third-Party Options?

Collection Agency Percentage collections agency Flat fee collections agency

What to Look for in a Third-Party

Proper Accreditation/Licensed Reputable Experienced Easy to do business with Partners with key professional associations

Disadvantages to using a Third-Party

High cost Alienating the patient Losing control of account Already invested a lot of work to win the

account over

Advantages to using a Third-Party

A third party gets the patient’s attention and makes an immediate impact

Implications for patient’s credit record Removes doctor from position of “bad

guy”

10. Remember: Have realistic expectations of your accounts

receivable program.

Useful Resource Links: The Association of Credit and Collection

Professionals (American Collectors Association) http://www.acainternational.org/default.aspx

The Fair Debt Collection Practices Act http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm

National Better Business Bureau http://bbb.org US Chamber of Commerce

http://www.uschamber.com/default MGMA resource center http://mgma.com/resources/

“GLI”: GreenFlag/LeonardoMD InterfaceLeonardoMD & Transworld Systems share a common objective to deliver greater value to medical practices seeking a more efficient collection process. Our collaboration has produced an interface that minimizes internal efforts and reduces billing expenses for our mutual customers.

The “GLI” is a seamless interface that eases the process of identifying and submitting delinquent accounts for outside collection activity. It also allows the user to stop outside collection activity when payment is received…all from within the LeonardoMD client portal.

“GLI”: GreenFlag/LeonardoMD Interface

How does it work?

1. The practice determines outside collections parameters based on amount, age, and type of delinquent balances they want the interface to identify for possible outside collection activity.

2. The “GLI” then generates a dialog box of identified Delinquent Patient Balances and/or Insurance Claims. The client reviews these accounts and determines which accounts to submit or exclude from outside collection activity.

3. When Payments are Posted in the LeononardMD Client Portal they are automatically reported to GreenFlag to stop or suspend collection activity.

“GLI” Setup Screen

Automatic Submission

“GLI” Webpage Dialog

Thank you.

Transworld Systems Inc. provider of

GreenFlagSM Profit Recovery Services

An MGMA AdminiServe Partner

November 18, 2008

Questions?Contact: Roy J. Gustafson

281-480-1977 ext. 6

[email protected]

web.transworldsystems.com/leonardomd

Profit Recovery Consultant – Medical/Healthcare Industry

Transworld Systems Inc.

provider of

GreenFlagSM Profit Recovery Services

An MGMA AdminiServe Partner

growing a healthy practice: top 10 ways to increase cash flow and reduce past due accounts presented...

Documents

collection slide

patient slide

options slide

survey slide

collection policy policy

policy patient

effective collections

abusive collection practices