Patient Balances and Your Practice's Financial Health
The financial health of any practice is vitally important to its long-term success. One key component of maintaining a successful practice is the timely collection of patient balances. Understanding the importance of collecting patient balances and their impact on your practice’s financial health is essential to staying afloat. In this blog post, we will discuss why it is so important to collect patient balances promptly and how it affects the overall financial health of your practice.
What Causes Collection Delays?
Patient’s Insurance Plan: Patients may be unaware of what is covered by their insurance plan, leading to delays in payment. Often, the amount billed is more than what the patient’s insurance plan covers, and they may not have the resources to cover the rest.
Patient Awareness: Patients are also often unaware of the amount they owe or even owe anything. For instance, it’s common for patients to miss deductibles, copayments, or coinsurance payments, which can lead to delays in payment.
Billing Errors: Billing errors are another common factor that can lead to delays in collection. Even minor mistakes like incorrect coding or billing for services that weren’t provided can cause delays in payment from insurance companies and patients alike.
Slow Reimbursement: Many insurance companies take a long time to process claims and reimburse providers. This can cause significant delays in the collection as providers may not receive payment from an insurer until weeks after submitting a claim.
Collection Strategy: Finally, many practices don’t have an effective strategy for collecting patient balances. They may not have a consistent system for following up with patients or tracking payments, leading to delays in collection.
Taking steps to address these issues can help improve collection rates and protect the financial health of a practice.
Why it's important to collect patient balances?
Increased practice revenue: Collecting patient balances is essential to maximizing the medical practice's revenue. Even though the Affordable Care Act has brought in more insurance plans, many patients are still responsible for their deductibles and out-of-pocket expenses. By collecting patient balances, you can ensure that your practice receives full reimbursement for its services.
Reduced accounts receivable: Patient balances are one of the main contributors to accounts receivable (AR). Collecting patient balances promptly can reduce AR and the burden on your practice’s finances.
Improved financial stability: By ensuring that your practice collects its patient balances, you can ensure that it has stable and consistent sources of income. This helps provide the financial stability needed to pay overhead costs and support the practice's operations.
Improved cash flow: Timely collection of patient balances also helps improve the practice's cash flow. This improved cash flow can be used to reinvest in practice, pay salaries and other overhead costs, or expand services.
Collecting patient balances is essential to a healthy medical practice, providing financial stability and quality patient care. By ensuring that all overdue bills are cleared, and all deductibles and out-of-pocket expenses are collected, you can maximize your practice revenue and ensure that your practice has a steady source of income.
How patient balances affect your practice's financial health
The collection of patient balances has a direct impact on the overall financial health of the practice. Poor patient balance collection can lead to a situation where the practice cannot cover costs such as wages, rent, and equipment or supplies, leading to severe financial losses. Additionally, uncollected patient balances can cause cash flow problems within the practice, potentially leading to payment delays or other vital tasks.
By increasing patient balance collection and simplifying the process, practices can maximize their revenue and ensure long-term financial success. Therefore, practices need to ensure they are taking the necessary steps to increase the collection of patient balances.