Financial stress can hit all consultants’ private practices at some stage – as recent events have highlighted. Simon Brignall outlines the three key problem areas and the questions you should address
OVER THE years, I have been asked a wide range of questions during my meetings with consultants, the most common being on how they compare with their colleagues and ways that they can improve their practice.
They are generally referring to their turnover and you can now add to this mix questions I’m asked about how I feel their practice is recovering from the impact of Covid-19.
These seem like simple things to ask, but they often have complex answers that can be impacted by any or all of the following:
- How much time you devote to your private practice?
- How long you have been in private practice?
- Where is your practice located?
- What is your fee schedule, patient mix and specialty?
Levels of distress
It is important to realise that every practice is different which is why, at Medical Billing and Collection, we tailor our services to the needs of each consultant.
As most consultants who come to us are in various levels of distress, the second most common question I get asked is: ‘Am I in worse shape than my colleagues?’
My response is always polite and understanding, as often there are a range of factors that have contributed to the position that they currently find themselves in.
It is important to realise these are factors that can plague both small and large practices and also established consultants as well as new entrants to the field.
I have taken on a consultant who had close to £400,000 outstanding as well as a couple of clinics that were owed over £1m. We were able to assist all of them to retrieve most of their outstanding funds and make appropriate tax adjustments for what was left.
We achieve bad debts of less than half of one per cent, but we regularly see examples in private practice of bad debt between 5% and 10%.
Let us explore the three commonest causes why most doctors who seek our help are in some form of distress with their financial affairs.
The following are in no particular order. However, the challenges are probably something most consultants face at some stage during their private practice life cycle.
One of the first challenges a consultant comes across when they set up in private practice is to put in place the correct infrastructure to ensure it is run soundly.
This means having a robust auditable system to facilitate the practice’s financial elements and would include the ability to raise invoices and reconcile payments. Remember to ensure that it meets the latest regulation requirements such as General Data Protection Regulation.
You should have the facility to chase outstanding invoices through a mixture of methods such as phone call, email and letter, and a system to collect payments from self-pay patients via a range of payment options including card payments. At MBC, we have the facility to collect money 24/7 through our online payment portal.
I often see practices being run on a mixture of spreadsheets and word processing documents, sometimes combined with folders stuffed with paper copies of clinic and theatre lists.
To make matters worse, these software programmes are being run on laptops and PCs that are never backed up. So if the device is either lost or the software becomes corrupt, then the entire practice data, including its financial information, is put at risk.
It does not matter about the size of the private practice. If the consultant does not have the correct infrastructure in place to support the financial aspects of private practice, then this needs to be addressed immediately because every day that passes, they are placing their income at greater risk.
Once a practice becomes established, the next key challenge is to appoint the right secretary to assist the consultant in growing the practice. The medical secretary is the bedrock of any successful practice and is often the busiest person.
Medical secretaries are expected to wear many hats, including receptionist, personal assistant, sales ledger clerk, insurance guru, credit controller and debt collector.
Few individuals have the combined skill set required to complete all these tasks perfectly as well as find the time to fit them all into a working week. The explosion in email and other digital methods of communication from patients means they are often just running to keep up.
That is why it is an almost impossible task for one person to cope with, especially as the practice grows. In our experience, once the practice reaches a certain size, the secretary is so busy dealing with the patients and the medical side of the practice that the billing and collection is the area that often gets neglected.
When a good secretary has been with the practice for some time, they can appear to have everything under control. But if they leave or retire, then the impact on the practice can be devastating, particularly financially.
Key person dependency
Unfortunately, this tends to become apparent only later when the practice starts suffering from poor cash flow because the billing and collection is behind or, even worse, invoices are not raised correctly, resulting in a loss of income.
The consultant often thinks the new secretary can cope in the same way as the previous one, but, in our experience, this is rarely the case.
In general business, it is not a good idea to be reliant upon one key individual. ‘Key person dependency risk’ in medical practice is mostly unavoidable, as most consultants are sole practitioners.
A good solution can be to outsource the medical billing and collection to experts. This ensures practice finances are in good order with the added benefit that the secretary has more time to look after the other elements of running the practice.
It also is good to split the medical and business side of the practice, so that the conversations with patients are compartmentalised, leaving the secretary to manage the patient’s clinical needs. Then, if the secretary leaves, the replacement process will be less stressful and from a financial perspective will have minimal impact.
3. Debt control
If you have the above areas under control, then probably the biggest challenge is to ensure correct billing and keeping the outstanding debt under control. Few practices achieve this feat consistently. I still regularly come across practices that either are making mistakes with their invoicing or are underbilling.
But probably the most common issue I find when talking to consultants is that they do not know how much they are owed or how old the debt is. You cannot begin to tackle a problem if you have no visibility about its size and scope or, even worse, do not know you have a problem.
Ensuring that you have up-todate accurate information around outstanding debt is vital. We provide our clients with 24/7 access to their practice data, which allows them to run an array of reporting, including a report detailing their outstanding debt.
Once you have visibility on your aged debt, it is important to ensure you put in place robust procedures for chasing and collecting outstanding bills. Procedures are only effective if routinely followed – and that is rare.
All these elements are controlled if the medical billing and collection is outsourced. It means a strong and consistent cash flow and alleviates much stress when it comes to paying HM Revenue and Customs.
Most problems can be resolved if decisive action is taken once the financial problems appear.
“We regularly see examples in private practice of bad debt between 5% and 10%”
WHAT YOU SHOULD DO
- Ensure your financial infrastructure is robust, auditable, secure and backed-up. The financial consequences of not doing this do not bear thinking about and if you are ever investigated by the HM Revenue and Customs, it could get even worse
- See that your practice is not too dependent upon one person. No matter what business you are in, it is not good practice to rely on a key member of staff
- Understand your billing and know what your debt is at any given time. Establish how much you are owed, how old the debt is and make plans to resolve it. Do not ignore the problem.
- Whatever the size of your private practice, take the opportunity to review it based on the challenges outlined and take action promptly or it may be something you regret not doing
- Alternatively, outsource your medical billing and collection through a professional organisation which will take care of each of the above challenges in one stroke
Simon Brignall is director of business development at Medical Billing and Collection