This is your captain speaking: ‘There may be turbulence ahead for independent practitioners’ finances.’ Simon Brignall explains why and shows how to have a happy landing.
The private healthcare sector benefited from strong demand in 2022, propelled in no small part by the ongoing problems in the NHS.
There have been multiple data points in recent months, such as from the Private Healthcare Information Network, that showed a 39% increase in self-pay activity from 2019.
At Civica Medical Billing and Collection, our own internal numbers have confirmed this, with more than 90% of our clients billing above their 2019 levels and many seeing a 50% increase in self-pay activity.
With NHS waiting lists around seven million, this tailwind is likely to continue. However, there could be turbulence ahead.
We are yet to see the full impact of inflation fuelling the cost-of-living crisis. This, in combination with the Government’s fiscal response, will likely impact on the sector.
It is worth noting that despite newspaper headlines about squeezed households, many older prospective patients are shielded from the full effect of this, as they either own their own home or have smaller mortgages.
Reductions in disposable income are more likely to affect younger and middle-aged consumers and so discretionary decisions about employee-contracted healthcare may face difficult choices when budgets are tight.
This is not to say that the medium- to long-term outlook for the private sector is not positive, but merely to highlight that the short-term could prove to be a little choppy.
It is always a good idea to make sure your practice is best prepared and so I would recommend making the following pre-flight checks.
1 Check your instruments
One of the best indicators of the impact on any business of economic volatility is previous performance.
The recovery in 2022 resulted in an increase in demand for private healthcare and, as the saying goes, a rising tide lifts all boats. But as the ‘Sage of Omaha’, Warren Buffet, famously said: ‘It’s only when the tide goes out do you see who was swimming naked’.
Many private practices benefited from increased patient footfall over the past year, but I have had many conversations with consultants who felt they were not getting the full benefit of this activity.
This can be a for a variety of reasons such as
Delays in invoicing;
Reconciliation and chasing problems – especially chasing;
Limited payment pathways.
The first two problems are often a result of staff not being able to manage the increase in demand effectively, while the last is a lack of appropriate functionality.
All these issues mean that the practice suffers from cash flow issues, patient dissatisfaction and potential losses in income.
Even a busy practice needs to know what invoices have been raised and what still needs to be actioned. You also need to have access to accurate and up-to-date reporting that shows how much is outstanding.
It is no good having reports that do not reflect the true position of the practice, as this will limit your ability to manage your practice effectively and impede the chase process.
It is not uncommon for me to find that it is larger busier practices that have the biggest issues in this area.
Often it is hard to comprehend that your practice is as much of a business as any other profit-making organisation, given the nature of what you do. For this reason, a consistent cash flow is vital to keep your practice in the air.
Although providing great care for your patients in their time of need is the main priority of your practice, it is important that you do not forget the fuel you need to keep it running.
Issues with your cash flow can have a direct impact on how you operate your practice and how you choose to deliver care to your patients.
2 Avoid delays in invoicing
It is vital that you ensure your work is invoiced as promptly as possible.
Failing to do this at the correct time can have a knock-on effect on your revenue cycle and make the practice look unprofessional.
Creating your invoices in a timely fashion means that any issues arising, especially with insurance companies, can be resolved quickly and increase your chance of a speedy payment.
It is important to remember some insurance companies have a specified time limit in which you must raise your invoice otherwise they will refuse to pay – leading to lost income for you.
At Civica Medical Billing and Collection, we like to eliminate any potential issues before they occur. We invoice insurers and patients electronically, where possible.
This is an all-round more efficient way to send invoices because it minimises the chances of important documents getting lost in transit and provides evidence of receipt.
This delivery method is also extended to self-payers, where possible, as patients tend to prefer receiving the invoice on their phone, which allows them to be able to pay it with ease.
3 Know which passengers have paid
This is often something that is easier said than done, because there are two components that need to combine to ensure this works effectively – which is why it often can go awry.
Firstly, it is important to have a system that shows you exactly which patients’ invoices are outstanding and highlights those where there is an issue that you need to address. For many independent practitioners, this will be practice management software, but a simple Excel spreadsheet will suffice.
Secondly, whatever solution you choose, it is only as good as the data it contains, so making sure that payments are reconciled on a regular basis is key.
The best practice management software in the world will not solve this problem if this key task is set aside when a practice is busy.
The reason this is important is that many insured patients can be subject to shortfalls, excesses and co-payments. The patient is then liable for an outstanding balance, which they will need to be invoiced for, as well as often contacted to explain why this happened.
This can become an extremely time-consuming task. Many patients do not realise they are liable. It is unlikely that they have reviewed the terms and conditions of their policy.
Remember, delays in invoicing only further delay problems being identified and reduce the likelihood of an invoice being paid.
4 Find time to chase
Failure to implement a routinely-followed, robust chase process is the biggest problem most practices experience and is one of the main issues that are highlighted by consultants when I meet with them.
There are many reasons for this and often it can result from a practice’s success.
Of all the steps in the revenue cycle, the chase process is especially liable to be impacted by the 80/20 rule. This is where 80% of the time spent by your admin team is focused on chasing 20% of your outstanding invoices.
It is not surprising that chasing is often the first task to be set aside. That results in an escalation in aged debt, a deterioration in cash flow and the whole issue spiralling out of control.
Our well-structured engagement process sees late payments collected as quickly and efficiently as possible. It is important that whatever process you employ, it is actioned regularly and subject to the same methodology.
For best practice, you should keep accurate records relating to this activity and action any queries that arise promptly.
Our clients’ patients can pay 24 hours a day via our online payment portal – giving them the flexibility to be able to pay when it is most convenient for them.
We have found that offering this service alongside other unique functionality improves the invoice collection time significantly and means we have a bad debt rate below 0.5%.
5 Improve the patient experience
The invoicing side of your practice is an important part of the patient journey and offering the full range of payment pathways and options they require should be seen as an integral part of a modern practice (see box above).
There have been many references to the importance of self-pay patients and even practices that see predominantly insured patients still need to invoice patients for shortfalls and excesses.
The start of a new year and the impetus this brings is always a good time to review a practice and implement change.
If any of these checks highlight an area of concern for your practice, then often the best solution is to contact a professional medical billing and collection company to ensure a smooth flight.
Simon Brignall (right) is director of business development at Civica Medical Billing and Collection