Office Finance and Collection at the
Point of Service
Point of Service
Conflicting Principle: the business model of pain
management and the obligation to treat suffering.
management and the obligation to treat suffering.
While at times difficult to balance these issues, there are ways to employ both
principles simultaneously. The office of a physician is a business. There are
employees, fixed expenses, and the financial needs of expansions and emergencies,
equipment expenses, medication expenses, etc. Therefore as charitable as
physicians would like to be, there are specific income requirements that must be
met and this cannot be done through excessive free or under-cost services. If
physicians collected all they charge, then the charges could be much lower. If all
payer groups paid approximately the same amounts, then the overall charges would
drop precipitously. But there is wide variation in income derived from each patient
due to contracted pricing with insurers, mandated socialized programs such as
Medicaid and Medicare, non-pay patients who will try to derive as much care as
possible without ever paying anything, and insurance adjustments to the amounts
paid. When considering the income derived from Medicaid, it may be less than the
cost of the office expenses not to mention the increased incidence substance abuse,
no-shows for appointments or procedures, social issues, and self-destructive
behaviors that are pervasive in the Medicaid population. On the other hand charity
may be derived by giving significant weight to the patient's welfare and financial
status by not requiring expensive injections in order to continue to receive
treatment. If the injections are necessary, then scheduling them in a physicians
office can safe hundreds to thousands of dollars. The acceptance of a limited
number of non-paying patients is reasonable. Reasonable use of injection therapy
such as scheduling by patient response instead of "series of three" injections that
have no basis in medical fact is prudent. All these efforts are charitable.
The business aspects of a practice and how the practice manages financial policies
is critical to the success of the practice. Collection policy, charges, fee structures,
and the nuts and bolts of monetary transactions all play a roll in financial solvency.
POLICIES FOR FINANCIAL SUCCESS:
1. Everyone must be charged the same amount for the same service. It is not
permissible to have "no charge" patients and Medicare considers it fraud if a
physician undercharges patients.
2. Once the charge is made, it is permissible to write off or adjust the charges.
3. Collect co-pays and deductibles prior to the patients leaving the office. Your
business is not a bank, and absolutely should not extend credit unless there are
extenuating unusual circumstances. No other business extends credit at the time of
service without prior arrangement and neither should your business. If there are
vociferous complaints about this policy, use the analogy of a grocery store. At the
checkout line in the grocery store, neither would the purchaser ask to make
payment later nor would the store permit it. The co-pay amount may be found on
some insurance cards or in many cases on-line if the patient does not know the
percentage. If your office does not collect at the time of service for office visits,
you will find a rapidly escalating accounts receivable and also an accounting
nightmare with later payments and partial payments being made for previous bills.
Additionally, there are many people who have no scruples about not paying the
amounts due to physicians, especially to physicians they see only once or twice.
4. If there are any scripts, lab requisitions, or radiology requests, do not give these
to the patient. Instead, hand these to the secretary at the check-out window in
your office. She should hold these until payment is made. If the patient does not
have the money on hand, offer to take visa or mastercard. If they cannot pay for
the services at this point, ask them to return with the funds to pay for the services
rendered, and hold the scripts/lab & xray requests until then. Know the location of
the nearest ATM machine and direct the patient there.
5. Offer a variety of payment mechanisms cash, check, or credit card. There are
credit card machines with on line verification of credit or debit cards and some
include a check verification service. The availability of these payment mechanisms
and the subsequent income derived are worth far more than the cost of these
machines, therefore they should be universally available.
6. Check the insurance cards on every visit. The secretary can verify the insurance
card on patient arrival. Also new addresses and telephone numbers should be
verified on each visit. Insurance cards expire or at times the patient may have 2 or
3 simultaneous insurances in force. If the patient looses their job, sometimes their
benefits terminate immediately if the patient does not purchase Cobra, which most
do not. Therefore ask about employment changes on each visit.
7. Enter the charges into your billing system or transmit the charges to your billing
company daily. Do not wait one week to send in bills...this is inefficient use of your
money and is effectively lending credit to the patients and insurers.
OFFICE FINANCE
To run a business effectively, one needs to have the following:
1. Initial business model with some rough projections of income and expenses
2. A line of credit for emergency or urgent use. This line of credit may be one you
or you and your partners extend to the business in the form of a loan (must be paid
back with interest at the market rate) or a bank line of credit. Such lines of credit
are generally best if used infrequently or only when purchases are needed with a
timely payback of the line of credit. It is prudent to not overextend the finances of
the business by using a line of credit to pay the majority of startup costs and the
operations costs.
3. A headstart on insurance credentialling...this can save you months of negative
cash flow.
4. Functional but not premium office equipment and suppies with which to begin
the practice.
5. A modestly priced accounting system such as Quickbooks (it is not necessary to
have the services of an accountant full time...but a part time accountant to help
determine the tax amounts to be paid monthly to different entities can be very
useful).
6. Real time access to bank account balances and information can be very useful.
7. The internet is an increasingly critical part of daily operations. I suggest a cable
modem if you are planning to use a VPN network, terminal emulation, or use your
laptop computer entry off-site for your data entry. Otherwise DSL may work
effectively unless you are attempting to download xrays, etc. Dialup is far too slow
to be useful in a busy office.
8. An inexpensive electronic medical record system (eg. www.amazingcharts.com) is
an excellent way to avoid charting overflow, storage issues, etc. and can provide
instant access anywhere in the world through www.gotomypc.com. The electronic
medical is an immediate cost savings measure if the initial price is not too expensive.
9. An expandable computer system is very useful with an inexpensive server
(www.dell.com) and a few workstation computers tied to the server.
10. Revisit the budget at least once every 3 months to assess and redefine the
budget.
principles simultaneously. The office of a physician is a business. There are
employees, fixed expenses, and the financial needs of expansions and emergencies,
equipment expenses, medication expenses, etc. Therefore as charitable as
physicians would like to be, there are specific income requirements that must be
met and this cannot be done through excessive free or under-cost services. If
physicians collected all they charge, then the charges could be much lower. If all
payer groups paid approximately the same amounts, then the overall charges would
drop precipitously. But there is wide variation in income derived from each patient
due to contracted pricing with insurers, mandated socialized programs such as
Medicaid and Medicare, non-pay patients who will try to derive as much care as
possible without ever paying anything, and insurance adjustments to the amounts
paid. When considering the income derived from Medicaid, it may be less than the
cost of the office expenses not to mention the increased incidence substance abuse,
no-shows for appointments or procedures, social issues, and self-destructive
behaviors that are pervasive in the Medicaid population. On the other hand charity
may be derived by giving significant weight to the patient's welfare and financial
status by not requiring expensive injections in order to continue to receive
treatment. If the injections are necessary, then scheduling them in a physicians
office can safe hundreds to thousands of dollars. The acceptance of a limited
number of non-paying patients is reasonable. Reasonable use of injection therapy
such as scheduling by patient response instead of "series of three" injections that
have no basis in medical fact is prudent. All these efforts are charitable.
The business aspects of a practice and how the practice manages financial policies
is critical to the success of the practice. Collection policy, charges, fee structures,
and the nuts and bolts of monetary transactions all play a roll in financial solvency.
POLICIES FOR FINANCIAL SUCCESS:
1. Everyone must be charged the same amount for the same service. It is not
permissible to have "no charge" patients and Medicare considers it fraud if a
physician undercharges patients.
2. Once the charge is made, it is permissible to write off or adjust the charges.
3. Collect co-pays and deductibles prior to the patients leaving the office. Your
business is not a bank, and absolutely should not extend credit unless there are
extenuating unusual circumstances. No other business extends credit at the time of
service without prior arrangement and neither should your business. If there are
vociferous complaints about this policy, use the analogy of a grocery store. At the
checkout line in the grocery store, neither would the purchaser ask to make
payment later nor would the store permit it. The co-pay amount may be found on
some insurance cards or in many cases on-line if the patient does not know the
percentage. If your office does not collect at the time of service for office visits,
you will find a rapidly escalating accounts receivable and also an accounting
nightmare with later payments and partial payments being made for previous bills.
Additionally, there are many people who have no scruples about not paying the
amounts due to physicians, especially to physicians they see only once or twice.
4. If there are any scripts, lab requisitions, or radiology requests, do not give these
to the patient. Instead, hand these to the secretary at the check-out window in
your office. She should hold these until payment is made. If the patient does not
have the money on hand, offer to take visa or mastercard. If they cannot pay for
the services at this point, ask them to return with the funds to pay for the services
rendered, and hold the scripts/lab & xray requests until then. Know the location of
the nearest ATM machine and direct the patient there.
5. Offer a variety of payment mechanisms cash, check, or credit card. There are
credit card machines with on line verification of credit or debit cards and some
include a check verification service. The availability of these payment mechanisms
and the subsequent income derived are worth far more than the cost of these
machines, therefore they should be universally available.
6. Check the insurance cards on every visit. The secretary can verify the insurance
card on patient arrival. Also new addresses and telephone numbers should be
verified on each visit. Insurance cards expire or at times the patient may have 2 or
3 simultaneous insurances in force. If the patient looses their job, sometimes their
benefits terminate immediately if the patient does not purchase Cobra, which most
do not. Therefore ask about employment changes on each visit.
7. Enter the charges into your billing system or transmit the charges to your billing
company daily. Do not wait one week to send in bills...this is inefficient use of your
money and is effectively lending credit to the patients and insurers.
OFFICE FINANCE
To run a business effectively, one needs to have the following:
1. Initial business model with some rough projections of income and expenses
2. A line of credit for emergency or urgent use. This line of credit may be one you
or you and your partners extend to the business in the form of a loan (must be paid
back with interest at the market rate) or a bank line of credit. Such lines of credit
are generally best if used infrequently or only when purchases are needed with a
timely payback of the line of credit. It is prudent to not overextend the finances of
the business by using a line of credit to pay the majority of startup costs and the
operations costs.
3. A headstart on insurance credentialling...this can save you months of negative
cash flow.
4. Functional but not premium office equipment and suppies with which to begin
the practice.
5. A modestly priced accounting system such as Quickbooks (it is not necessary to
have the services of an accountant full time...but a part time accountant to help
determine the tax amounts to be paid monthly to different entities can be very
useful).
6. Real time access to bank account balances and information can be very useful.
7. The internet is an increasingly critical part of daily operations. I suggest a cable
modem if you are planning to use a VPN network, terminal emulation, or use your
laptop computer entry off-site for your data entry. Otherwise DSL may work
effectively unless you are attempting to download xrays, etc. Dialup is far too slow
to be useful in a busy office.
8. An inexpensive electronic medical record system (eg. www.amazingcharts.com) is
an excellent way to avoid charting overflow, storage issues, etc. and can provide
instant access anywhere in the world through www.gotomypc.com. The electronic
medical is an immediate cost savings measure if the initial price is not too expensive.
9. An expandable computer system is very useful with an inexpensive server
(www.dell.com) and a few workstation computers tied to the server.
10. Revisit the budget at least once every 3 months to assess and redefine the
budget.