The costs of doing medico-legal work
Many consultants start doing medico-legal work without due consideration to the fees they should charge or their terms and conditions. Gary Nials shows how to get it right
In the current economic climate, many consultants are looking at alternative ways of increasing the size of their private practice.
With the private medical insurance sector shrinking over the last number of years, it is difficult for many to increase market share, so consultants have been looking outside of that sector.
sands of solicitors working in this sector either independently or through a group as well as via the medico-legal agencies.
Due to this plethora of potential clients, it is absolutely crucial that you get your practice prepared correctly from the very first contact with these commercial organisations.
In our experience, many consultants start doing medico-legal work without due consideration to the fees that they should charge or, in particular, to their terms and conditions.
What tends to happen is that they then find out some time after the work has been done that the case they have been working on is on a ‘no win, no fee’ basis. And that means they often end up waiting years for their money.
Cash flow problem
The obvious problem with this is the effect it can have on the cash flow of the practice.
The biggest problem, often overlooked, is that once the invoice is raised, it means you end up paying tax on it. This means that, until you collect the money, you are actually paying to do the medico-legal work.
If you have a large medico-legal practice and charge VAT, the situation is so much worse, as you would have had to pay the VAT, currently 20%, to HM Revenue and Customs (HMRC) every quarter – which increases your overall debt and exacerbates your cash flow predicament.
The worst case we have seen over the years is one practice which had started medico-legal work many years ago and every month it was invoicing more than it collected.
This had continued for so long that it led to an outstanding debt figure which had reached over £400k going back nearly ten years before we started working on it.
There are many factors to consider before starting working on medico-legal cases and I have focused on the billing and collection aspects, with the major issues highlighted in the box below. These should form part of your terms and conditions.
Once the above is resolved and you have formulated your terms and conditions, the next key step is to ensure you have a robust system in place to chase up outstanding invoices.
This should entail making sure that, in the first instance, your fees and terms and conditions are accepted up front before taking on any case.
Once you have raised the invoice, it needs to be followed up with a phone call to ensure that it has been accepted and has been put on the solicitor’s/agency’s system with the correct payment terms.
Even when all the above is done, you will still need a system in place to chase payment on a continual basis to ensure payment is made in a timely manner.
Should you have issues collecting payment with a particular solicitor/agency, then you need to think long and hard about taking on other cases from the same company or you could end up paying to do work for them.
Chasing the money on a continual basis is the hardest part of this whole administrative process, as most practices are not geared up for this specific aspect.
It is both time-consuming and requires a specific skill set. It is rare to find a practice which has the time to chase these invoices on a continual basis; even rarer that they have the skills in-house.
The alternative is to use a professional billing agency. Either hire them way before you start doing medico-legal work or, if you have been doing it for some time, then you need to gain control of this crucial aspect or run the risk of paying the HMRC for the privilege of doing the work.
- 01494 763 999
- Medical Billing & Collection
Buckinghamshire HP7 9LP
More than Just a Billing Company