Get ‘finance fit’ in Olympic year

Garry ChapmanUncategorized

Media

Get ‘finance fit’ in Olympic year

Getting ‘finance fit’ should be a priority for independent practitioners in the months ahead. Garry Chapman shows why it is more important than ever

It looks like 2012 will be another year of big changes for consultants working in private practice.
If you take into account what happened last year (see my 2011 review in the last edition of Independent Practitioner Today) and combine them with the issues below, then you probably have the perfect storm.

NHS
It will be interesting to see what effect changes in the NHS will have. All the forecasts seem to point to a rise in the self-pay patient for the private sector. This is driven by a rise in waiting lists combined with bad publicity about standard of nursing care on the wards.
This will present an opportunity for consultants to increase their market share. But if the practice does not have the correct infrastructure in place in order to invoice and chase the money efficiently, then you could easily end up working for nothing.
There will be opportunities for many consultants to position themselves to work alongside the NHS to offer their services on an outsource basis. This is a good way to boost their income, but it is likely to be at a lower price than they would normally charge So if they do not make sure that all work carried out is invoiced at the correct price and all of it is collected in a timely manner, then they could suffer cash flow issues.

Open referral
Another major change that is taking place is the open referral system Bupa has introduced (see Independent Practitioner Today, November 2011 and December 2011-January 2012). At the moment, it is not clear what effect this will have both in the market overall and on each individual’s practice.
Bupa has the lion’s share of the market, so until this has been in operation for some time, it is difficult to know what affect it will have on the number of patients that each practice gets referred from Bupa.
This uncertainty is another major driver to ensure that you know exactly what is happening in your practice from a billing perspective so that you have the information to take the correct decisions at the right time.

Economy
The market will also continue to come under pressure from the economic situation both in the UK and in the Eurozone.
At the time of writing, all the indicators are that the single currency market is unlikely to survive intact and that the result of its collapse will drag the UK back into recession. This means that chasing the self-pay portion of your practice will become increasingly difficult and harder to collect, resulting in an ever-increasing backlog of debt.

Self-pay
Due to all of the changes in the market that have been outlined, it is not unusual for a practice to have a substantial element of the billing to go direct to the patient.
Self-pay is not just the patients who do not hold an insurance policy; it also includes all those patients whose insurance policy does not cover all the costs.
This, in reality, can add up to be a sizeable amount due to benefit limits, patient excess on the policy, co-share policies where the patient agrees to pay a percentage of each invoice, and for many other reasons.
It is not unusual for the self-pay element of the practice to be the third biggest behind Bupa and AXA, and if it is not controlled on a day-to-day basis, it will lead to more bad debt.
Finance fit
If there was ever a year to get your practice ‘finance fit’, then this is it.
Over the years, many consultants have managed to exist without paying too much attention to the finance side of the practice and as they have grown, it has masked any inefficiencies.
Almost every consultant who joins us is owed a considerable amount of money. This is typically in the tens of thousands of pounds, but can also be in the hundreds of thousands of pounds.
In most cases, we see this debt has never been managed correctly, so it also means that a lot of the time the consultant has also paid tax on money they have never collected.

Garry Chapman is managing director at Medical Billing & Collection

Carry out your own audit to find out if your practice is ‘finance fit’
Establish:

  • How much you are owed and how old your debt is
  • How much of the debt is collectable or needs to be written off
  • Which patients owe you the most money and decide if they are a risk
  • How far behind you are with the billing – what date was the last clinic/that you billed
  • What procedures are in place to chase the outstanding invoices
  • If the procedures you have are being followed
  • What percentage of your practice is with self-pay
  • What percentage of your practice is with Bupa and monitor that situation

Once all of the above is known, then you need to decide what action you need to take in order to gain control of your finances and to stop losing money. Do not delay, take a look now.


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