“I didn’t go to med school to be an accountant.” How many times have we heard those words being muttered from a physician’s mouth?
Until now, that’s been an acceptable sentiment for any doctor. Today such thinking is financially dangerous if not downright disastrous. Even doctors in practice for as little as 10 years kept their focus on the insurance company, the source of 85 to 95 percent of their income. That almost predictable cash flow made reviewing accounts receivable reports — universally known as A/R — barely necessary.
Today, looking at A/R is an absolute requirement because of four letters that are having a huge impact on medical practices of all sizes and types – HDHP, which stands for High Deductible Health Plans.
These insurance plans have sent a loud and clear message to doctors across the United States: the game has changed. Simply stated, those practices that adjust quickly and wisely will be better able to survive. Those that don’t will be at risk of needing to sell out to hospitals or suffer serious issues with cash flow that could threaten the survival of their practices.
According to the annual report of America’s Health Plans, the number of U.S. residents using HDHPs rose nearly 20 percent in the past year. In 2013, 70 percent of larger employers will offer HDHPs, noted a Tower and the National Business Group of Health study. While the growth rate of this type of plan varies from region to region, no practice can think it won’t affect them soon.
The new reality is deductibles as a percent of contracted rates are about 50 percent. The days of the $25 co-pay are gone. Now practices are tasked with securing half the service bill’s balance from the patient. Unfortunately, physicians today don’t know the amount due until weeks after service, making it a priority to get the patient bill out as soon as the claim is adjudicated by the insurance company. That’s especially the case at the start of a calendar or plan year.
No one is suggesting doctors turn in their white coats and stethoscopes for green eye shades and a handful of sharpened pencils. However, they must become more attuned to the state of their practices’ financial condition. If a system is not embedded in their practice management software to manage patient bills and balances as well as produce insightful A/R reports, the doctor and his/her office manager should identify one and put it into place. Even if a new practice management system has just been deployed, that doesn’t mean you don’t need to ask the questions immediately of how to capture patient balances and post them automatically.
In the HDHP environment, everyone in the practice has a role to play, from front desk personnel to physicians. Each member of a practice should be educated on the new reality of HDHPs and how patients understand this new reality. However, it is also the responsibility of the practice to provide patients a simpler way to meet their financial obligations to the practice and continue to keep their healthcare relationships sound. If patients understand and have easy ways to remit payments, the physician keeps a sharp focus on the practice of medicine, secure in the fact that the A/R is being managed.
However, make no mistake, there is a limit on how much delegation a doctor or his/her office manager can allow. The tough calls need to be made by those individuals leading the practice. Decisions of the sort that most medical professionals could never have conceived of during their internships, like “firing” a patient.
Think about it: with HDHPs, the shift from patient to deadbeat can occur in a matter of weeks if close attention is not paid to A/R.