Billing matters whether you are small or big

Consultants, groups, clinics and hospitals all experience difficulties with their medical billing and collection. Simon Brignall examines the scale of the problem and shows that it is often a challenge for everyone in private healthcare.

The nature of my work means I often speak to consultants about the issues they are facing around their medical billing. 

It is common for them to be worried about a wide range of issues including:

 The size of their aged debt and problems with cash flow;

 Lack of transparency and access to accurate up-to-date data;

 Billing errors resulting in lost income.

My first response is always to reassure them that they are not alone. We see these issues across our entire client base. 

Our clients can range from consultants new to private practice through to well established consultants, groups, clinics and hospitals. The problems are the same. Just the amounts concerned vary.

I thought it might be beneficial to look at each of these problems in turn from the perspective of the range of clients mentioned.

Aged debt and cash flow

One of the benefits of being new to private practice is that you start off debt-free. However, you will soon realise that despite the excellent care your patients have received, not all the invoices you raise are settled promptly. This can be for a variety of reasons such as:

  • Issues with insurance companies;
  • Shortfalls, excesses and co-payments;
  • Delays in invoicing leading to delays in payments;
  • Lack of a robust chase procedure;
  • Limited payment pathways.

Quite soon, the debt starts to pile up and this is often around the same time that patient footfall starts to increase.

When you start out in private practice, there can be a lot of upfront costs such as medical indemnity/insurance and staffing. 

You may also choose to invest in software or even a website and so it is important to ensure you get paid for the work you do, as you create a tax liability when you raise an invoice whether it is paid or not.

Some consultants choose to do the billing themselves, but, in my experience, a specialist’s time is valuable and better employed in growing the practice, looking after patients, and leaving this key area to experts such as a medical billing company.  

Victims of success

Established consultants often find that if they have not resolved the problem, then their aged debt pile just keeps getting larger each year, leading to unnecessary write-offs and cash flow difficulties. 

Practices can become victims of their own success where, although the consultant is very active, the money coming does not reflect the work being done. As you can imagine, this can be very frustrating. 

We have partnered with consultants who have had 50-100% of their annual turnover outstanding when they initially came to us. We average bad debts of less than 0.5%. 

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In my experience, it is common for these tasks to get set aside in a busy practice, leading to increased aged debt. Not all medical secretaries enjoy chasing outstanding debt – and even for those that do, there can be an opportunity cost.  

Managing patient inquiries is a more efficient use of their time instead of being on hold with an insurance company. Practices’ revenue often rises when they can focus more on the clinical side of the practice. 

Complexity of groups

Groups have the added complexity of not only additional consultants but also various models. These models range from virtual groups where they function as individual practices behind the scenes, to more formal structures such as limited liability partnerships with shared administration and a common bank account. 

Consultants who make up the group can be working at different locations and have their own patient demographic each with its own challenges.

Some clinics invoice facility fees for treatments and diagnostic testing and this can be on top of consultant billing. We partner with a range of clinics, each with their own specific nuances and payment pathways. 

Private medical insurance contracts are unique to each clinic and the invoicing needs to be raised in accordance with the rules specified in each agreement. 

This can prove challenging and, if not managed effectively, can result in considerable aged debt or lost income. 

Some clinics we have worked for had over £1m in outstanding debt at the start. Your size does not mean you are free from billing and collection problems.

Most billing companies’ fees are calculated against the practice’s received income. So charges are always correlated against a provider’s cash flow. 

Transparency and access to data

A common complaint I hear from consultants is that they have limited or no visibility of their practice finances. But if you have no access to up-to-date accurate financial information on your practice, how can you manage it effectively or make strategic decisions about its direction and growth?

New consultants generally rely on their PA to provide them with information on their practice and some even carry out the billing role themselves. Both options rely on the billing and collection process being routinely actioned. From what I see, this rarely happens. 

Consultants who are managing this task can get behind on their billing or have difficulties managing the various platforms.

Medical secretaries, even if they are up to date with their billing, can still have issues with allocating received payments and chasing outstanding debt. This can reflect poorly on the practice and result in dissatisfied patients and losses in income.  

Established practices can suffer from the same problem due to poor infrastructure, higher patient volume or staff absence. 

Staffing decisions

Groups and clinics are organic in nature and often are required to make binary decisions about staffing, which makes managing this difficult. 

An outsourced billing option can be the best solution, as you have the capacity of the billing company on tap to manage increased activity effectively.

Groups will also want to monitor their performance. Depending on their structure and ethos, they give access to this data to either the group lead or let each consultant access their own data. Accurate data is important, as this is often used when calculating the allocation of funds to each consultant. 

Clinics can have multiple locations and departments, which require regular detailed financial reporting to the management team. 

With 24/7 access to our reporting tool, consultants can run a range of reports to review their practice at both the summary and granular level. This means they can review our performance as well as their own. 

We provide groups with access to their data at either the group or consultant level and, for clinics, we replicate the organisational structure in our software, which enables us to tailor specific reporting as required.

Medical billing problems can impact all levels of private healthcare regardless of size and type. If any of these issues sound familiar, then I recommend you do a review and then implement processes to rectify any problems you identify. A good option may be to engage the service of a medical billing and collection company who are experts in this field. 

Clinics and hospitals who out­source can also free up valuable space for revenue-generating activities.   

Billing errors

Mistakes in the billing process can be costly and result in thousands of pounds in lost income. I see this problem across the board. 

Each insurance company has its own rules about the billing of multiple Clinical Coding and Schedule Development (CCSD) codes. It can be confusing and I still come across practices where they are billing at the wrong rates. 

This can soon add up, as each insurer has its own CCSD fee schedule for billing and rates can vary by as much as 100%. 

Groups, by their very nature, are more complex, as each consultant may have their own fee schedule due to their individual experience or different contractual relationship with the medical insurers. 

One of the first things we do when we take a new clinic on board is to confirm that it is invoicing in line with the terms of its contract. 

You would be surprised how often we discover that the prices in a clinic’s software either differ from their contractual rates or an agreed annual uplift has not been applied.

Simon Brignall (right) is director of business development at Medical Billing & Collection