Stop pouring it away

Garry ChapmanUncategorized

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Stop pouring at away

Consultants in private practice are continuing to lose out on money they have rightly earned.
In the second of two instalments, Garry Chapman looks at the tax impact on specialists’ businesses and outlines the stages to go through to make your own billing audit

Stop-Pouring-it-away-1Poor billing and collection of money that private doctors are owed has big tax implications.
Consultants are typically taxed on work which has been invoiced through the practice, which means that if any invoice is not collected, then they are literally pouring money down the drain.
This is further compounded if aged debtors are not managed efficiently. Some consultants have no structured, objective process for tracking bad debts, including when to write them off. This means that tax that has been paid on the billing has never been claimed back.
Sole practitioners do not have the exclusive rights to losing money! In fact, the bigger and more successful the practice, the worse the billing and collection outcome can be.
In most cases we see, the situation only becomes apparent when it is brought to the consultants’ attention through a major event.
This could be anything from the secretary falling ill or leaving to a demand from HM Revenue and Customs that cannot be met.
Neglecting the finance issues can result in consultants losing tens of thousands of pounds, which is money that can never be recovered. In this day and age, there is no need for the practice to suffer the financial losses when alternatives exist.
What’s the answer? Outsourcing medical billing and collection to a specialist organisation where the sole focus is to obtain re-imbursement on behalf of doctors. This is a full-time job and if doctors want to maximise their time with patients, to be paid all that they are entitled to, to have steady cash flow and minimal bad debts, they need to let professionals perform their re-imbursement tasks.
Using a specialist organisation not only means the consultant receives the maximum amount they are entitled to for the patients’ treatment, but also prevents them from having to invest time in administration.
They will also not have to spend valuable time learning and keeping abreast of the art and science of getting paid by insurance companies, thus allowing them to maximise time for their patients, which generates further income.
Our company, Medical Billing & Collection, has experienced over 20 consecutive years of growth through achieving exceptional billing outcomes for its clients – consultants’ bad debts average less than 0.5%, revenue has been increased by up to 25%, and they are getting a consistent weekly cash flow.
All of this is achieved for a customer base that ranges from the consultant who is just starting out in private practice through to some of the most established and prominent consultants in the country including large groups.

Case studies
These case studies are all based on consultants who have joined us since I wrote a previous article in November 2009, so I know that the practices with major issues still continue to exist.
One of our clients who joined us had debts of over £100k and had not changed their pricing since they had started in private practice more than ten years ago.
Their fee structure bore no resemblance to current market conditions nor to the insurance firms’ fee schedules. On top of this, the consultant was chasing his own patients for money – an unpleasant experience for both parties.
Since then, we have reduced the bad debts to our average across all clients of less than half a percent.
The practice has increased the fee structure to a level commensurate with the market and in line with insurance firms’ fee schedules, which has led to an increase in revenue of up to 25% for each code by ensuring the correct coding was used, combined with billing the correct fee for each insurer.
The above changes resulted in the practice earning over 100k a year extra without doing any additional work when compared to the previous years.

So busy
Another client who joined us in early 2010 was a group of consultants who were so busy clinically that the secretaries could not keep pace with the growth they were experiencing.
This led to an outstanding debt which was in excess of £330,000.
On top of this, there was a two- to three-month delay in the invoicing being sent out, which was causing major cash flow issues.
We set about reducing this backlog, which went back years, and ended up with a successful collection rate of over 98%. We also billed the outstanding work very quickly and then ensured that the billing was done in a timely manner by keeping pace with the growth of the group. This led to a rise in net income by 20% for all the consultants involved.
Then there was the doctor who, on the surface, had a practice which was well run with his secretary who had been with him for years. But, upon closer inspection, it was established that he had some outstanding debts of over £50k.
A major issue that became clear was that the practice had been charging the incorrect prices for each CCSD code for each medical insurer for many years, costing it tens of thousands of pounds in lost revenue over the years. Once we started billing correctly and cleared the backlog, his net increase on revenue was over 20%.

Additional benefits
Consultants may understandably be nervous about outsourcing their finances, but they need to balance that feeling against the benefits, which are:

  • The relationship between the consultant and the patient is kept purely at the medical level, which ensures that the relationship is not tainted by commercial aspects.
  • The expertise in handling both medical codes and the nuances of each insurer as to how the codes should be used, ensuring that the billing revenue is optimised.
  • The expertise in ensuring that all the relevant information is present and correct when raising the invoice means there are no delays in the insurer or the selfpayer accepting the invoice.
  • The resources to ensure that there are no delays in raising the invoice, which, in turn, means the invoices can be chased in a timely manner, ensuring that the best chance is given to minimising bad debts.
  • The resources combined with an efficient process in place for chasing unpaid invoices, following up on shortfalls and dealing promptly with any problems with claims, resulting in vastly improved cash flow combined with cutting bad debts to a negligible level.
  • A variety of management and tax reports which can be tailored to the requirements of each practice
  • Potential disruption in a consultant’s practice, such as secretarial absence for sickness or holiday, does not affect the all important billing and payment collection, so continuity is assured.

Garry Chapman is managing director at Medical Billing and Collection Readers can register for a free billing audit by visiting www.medbc.co.uk or contacting Garry Chapman at audit@medbc.co.uk

Financial Health Check
While it is hard for most consultants to admit, the chances are that they have been losing money for years. Are you one of them?
To find out whether you can carry out your own billing audit, you should establish:

  • How much you are owed
  • 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 whether they are a risk
  • Whether your treatments are being coded correctly
  • Whether your codes are being accurately billed per insurer
  • Whether you are billing at the market rate
  • How far behind with the billing you are – what date was the last clinic that you billed?

Once all of the above is known, you need to decide what action you should take to gain control of your finances and to stop losing money.


  • 01494 763 999
    info@medbc.co.uk
  •   Medical Billing & Collection
    Connery House
    Repton Place
    Amersham
    Buckinghamshire HP7 9LP


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