Don’t treat self-pay patients for free

Self-pay patients are accounting for an average of 25% of specialists’ income, according to a major billing and collection analysis this month. Garry Chapman gives the reasons and shows how practices can do more to prevent so much of it becoming a bad debt

Many consultants think of private practice as the insurance market, but, in reality, it is not that simple.
Our analysis on the invoices we raised for specialist in 2011 shows that the private medical insurance (PMI) market accounted for only 66% of the total.
The remaining 34% was split between other organisations such as embassies, hospitals, solicitors – for medico-legal work – and other commercial organisations.
But the lion’s share of this non-PMI invoicing was self-pay patients. It accounted for an astonishing 25% of the total amount invoiced.
This figure is an average across all our consultants and can be significantly more depending on the specialty, type and location of the practice. Indeed, in some of our clients, self-pay turned out to be the largest part of the practice.
The reason the average of 25% is so high is down to many factors, but the major ones are highlighted below:

90% of the population do not have private health insurance and with the NHS suffering due to the confusion surrounding the changes it is facing, coupled with continuing bad press on the quality of care on some wards, this is leading to an increasing number of people seeking an alternative to the health service.

Insurance policies
In order to control the costs of the premiums, insurance policies will have elements which are not covered by the policy. This will be 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.

Overseas patients
If your practice is based in central London, this has always been a part of practice life with patients coming from outside the UK seeking private healthcare.

There has always been a percentage of people who have sought private healthcare without having an insurance policy.
And, even in the current economic climate, this market still appears to be buoyant

The reason all this information is so important is that, if you do not know what the statistics are in your own practice, you cannot make sure that it gets dealt with correctly by means of both a billing and collection process.
In our experience, this is rarely dealt with correctly. There is quite often a lack of clarity regarding billing self-pay patients and also about collecting the money, resulting in the practice having a huge amount of outstanding debt that is either chased on a sporadic basis or not chased at all. The result is debts that amount to a significant sum of money.
The reasons for this debt can be down to many factors, but, typically, what we see is a lack of a robust system in place to deal with this element of the practice.
What the practice needs to do is have a system to deal with each element of the self-pay patient, with the main ones highlighted below.

Overseas patients
When you are going to see a patient who is not a resident of the UK, you need to decide in advance what your charges are going to be so that it is clear to them exactly what the total cost of the treatment will reach. You then need to discuss the method of payment.
When we deal with these patients on behalf of our clients, we quite often collect the money in advance, as once the patient has left the UK, the chances of collecting payment dramatically reduce.
A common way of encountering an overseas patient is through the hospital. In this instance, the hospital may well agree to collect all money due from the patient, but unless you get your invoice to the correct department/contact in the hospital in a timely manner, it is likely that your fee will not get collected.
This then leaves you with the problems of chasing the patient for payment after he has left the UK.

UK self-pay
The majority of consultants are likely to have an element of patients who are self-pay. Therefore, they should have a price list provided and agreed methods of payment made clear in advance so that the patient is expecting an invoice and is prepared to pay either on the day or shortly afterwards.
When doing this for our clients, we have a variety of methods available to us, including taking payment on the day by debit/credit card or, dependent upon the requirements of the practice, we can even take money in advance.
When you cannot collect payment on the day, then you will need to put in place a system where the patient is chased for payment after an agreed period of time and then chased on a regular basis until payment is collected.

Insured shortfalls
Depending on the specialty and type of practice, shortfalls in insurance payment are normally by far the largest volume of the self-pay invoices and the hardest to collect.
This is because most patients do not understand their insurance policy and they believe that all costs are going to be met by their insurer.
So when they receive an invoice for their element of the treatment, it is an invoice they are not expecting.
From our experience, a lot of them ignore the invoice, as they are under the misapprehension it is a copy of what has been sent to the insurer.
So unless you follow up this with a phone call, it will just be ignored.
Once they are aware that the invoice is correct, then they may contest this with their insurer, as they believe all costs should be met under the terms of their policy.
A large part of what we do on behalf of our clients is liaise between the insurer and the patient to ensure that it is clear who owes the money.
Once the patient accepts that the money is owed by them and depending upon the amount that they owe, you need to be in a position to either take payment immediately or agree payment terms.

Economic pressures
The self-pay market will also continue to come under pressure from the economic situation. So unless you put in place a robust system as described above, it is likely your outstanding debt situation will continue to grow, as chasing this element of your practice will become increasingly difficult and harder to collect.
The alternative is that you could choose to use a billing company who have the expertise and skill set to remove this burden from your practice.

Garry Chapman is managing director at Medical Billing & Collection

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