Let others do the bill chasing

Doctors who audit the true cost of doing their own billing and collection could be in for a shock, says Garry Chapman

The number of consultants who have outsourced their medical billing and collection is growing as the process becomes more complex and time-consuming.
Dramatic market changes over the past few years mean specialists must cope with an ever increasing downward pressure from most insurance companies on their fees for both procedures and consultations.
On top of this, the practice has to deal with the increased yearon-year costs of running a business, making it harder to earn a reasonable profit.
Throughout this period, the number of consultants entering private practice has grown considerably at a time when there has been a big drop in the number of people taking out private health insurance. This makes it harder to maintain market share within the specific specialty of the practice.
The focus should be on making sure invoices are raised in a timely manner, that every procedure is billed correctly, taking into account the nuances of each insurer and invoicing with the correct
Clinical Coding and Schedule
Development (CCSD) group codes combined with the correct fee schedule for each one.
If this is all carried out correctly, then the invoices must still be chased to ensure the money is collected and any issues delaying payment are resolved.
Due to the recession, there has been a growth in the different types of insurance policies available, with many different levels of cover, which has resulted in a growth in the amount of money the patient has to pay in terms of each course of treatment.
This would typically be in terms of an increased excess on the policy, reduced benefit limits for a type of cover such as outpatient, reduced level of cover for specific treatments and or co-share policies where the patient has agreed to pay a percentage of each invoice.

Chasing shortfalls
That has meant more work chasing and retrieving, resulting in shortfalls for the practice that does its own billing and collection.
Where practices do it themselves, it is typically left to one person, often the consultant in what little spare time they have available.
As administration is not typically part of a consultant’s core skill set, it inevitably ends up being done late at night or at weekends.
This impacts on other aspects of family life and, in many cases, results in billing delays and a knock-on impact on the finances.
If it is not the consultant, then it is left to the secretary, who is often the busiest person in the practice and whose focus is on making sure all other aspects of the practice revolving around the patient are running smoothly.
So, again, the process gets relegated to being done when time permits, resulting in delays, cash flow problems and bad debts.
Even if done in-house and on time, I would, of course, argue that it is worth assessing the costs of doing so by including the hours involved. Running costs seem to increase year on year, with accumulated inflation of 14% over the past four years. There has been an even bigger rise in postage costs from the Royal Mail.
If you add in bad debts, then the cost of doing it in-house really escalates. From our experience, bad debts run at between 5%-10% and, in some cases, far more – an awful lot of money to give away.
Another thing to consider is that the insurance companies are now starting to put pressure on consultants to send invoices electronically to them (see my article in Independent Practitioner Today, page 8, March 2014). So if you do not have the facility to do this, then you need to spend even more money on putting the infrastructure in place to facilitate this.

Financial audit
To find out how much your own billing and collection is costing:

  • Establish how much time you and your secretary spend a week on all aspects of raising invoices, reconciling payments, chasing outstanding invoices and dealing with queries from patients/insurers that relate to outstanding invoices. Then work out the cost of the time based on the salary paid;
  • Calculate how much you spend on weekly postage relating to billing;
  • See how much you spend on weekly phone calls and what percentage of that relates to billing;
  • Take into account all of the associated stationery costs;
  • If you take credit/debit card payments, work out your monthly bill and the cost of banking;
  • Find out how much bad debt you have incurred in the past four years and then compare that to your revenue over that period to provide an average percentage of bad debts a year.

Some costs vary depending on practice location and circumstances, but check out my estimates of a financial audit on a practice with a £300,000 turnover (see box).
Outsourcing medical billing and collection to a specialist organisation allows practices to maximise the time spent with patients without the finance issues clouding the relationship.
It will also enable the practice to have steady reliable cash flow combined with minimal bad debts with maximum revenue generated for the work performed.
Using a specialist organisation means the practice receives the maximum amount they are entitled to for the patients’ treatment and also keeps the administrative costs as low as possible.
The consultant will not have to spend valuable time learning and keeping abreast of the changes in the private medical insurers’ schedules, which will allow them to maximise time for their patients, which, in turn, generates further income.
Typically, the fee charged for this service includes all of the associated labour costs, phone calls, stationery and postage, so not only do you get all the benefits listed below, but you save money by reducing the costs of running your practice Outsourcing brings:

➀ The expertise in ensuring that all the relevant information is present and correct when raising the invoice, which means there are no delays in the insurer or the selfpayer accepting the invoice.
➁ The resources to ensure there are no delays in raising the invoice, which, in turn, means the invoices can be chased in a timely manner, ensuring that the practice enjoys consistent cash flow.
➂ The resources combined with an efficient process for chasing unpaid invoices, following up on shortfalls and dealing promptly with any problems with claims, improving cash flow and minimising bad debts.
➃ A variety of management and tax reports which can be tailored to the requirements of each practice, including having online access to your own data.
➄ Freedom from any disruption caused by a a secretarial absence for sickness or holiday.
➅ The ability to raise electronic invoices to the insurance companies, ensuring a speedy payment process as well as compliance with their rules and regulations.

Garry Chapman is managing director at Medical Billing and Collection

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