Three Ways to Improve Cash Flow At Your Medical Practice

by Jonathan Williams
Commerce Bank

Spend less time on administration, and more on patient care.

If your medical practice is like most, its business model is built on credit. You provide services now—with the expectation you'll get paid later.

Thanks to bumps along the road to healthcare reform, that time lag seems to be growing. And it is creating significant cash flow problems in even the most successful practices.

Electronic claim filing and remittance are expected to help—eventually. In the meantime, there are things you can do to clear the blockages in your practice's cash flow pipeline and increase your operational efficiency.

  1. Invoice patients for out-of-pocket costs faster. Faced with rising costs, many health plans have increased deductibles, making patients responsible for a larger portion of their routine healthcare expenses. Unable to predict accurately what these out-of-pocket costs might be, medical practices typically wait to bill patients until after receiving insurance reimbursement. The process gets drawn out further when patients delay paying those invoices, unconvinced they are truly "final."

    There is a better way. By tapping into payers' systems, medical practices can assess the status of a patient's deductible and accurately predict out-of-pocket expenses at the time of their visit. With this knowledge, they can immediately obtain authorization to charge a patient's credit card once the insurance claim is settled.
  2. Deposit payments in your bank accounts more quickly. Many banks now offer solutions that enable medical practices to speed the time it takes to get payments into their accounts. In addition to improving cash flow, these technologies also enhance staff productivity and greatly reduce the threat of fraud. They include:
    • Lockbox services that allow a practice to have incoming payments collected at a secure post office box and transported to a bank for processing and deposit, eliminating the need for employees to handle incoming checks. Funds processed through a lockbox will be deposited more quickly and securely.
    • Remote deposit, which enables a practice to deposit checks into a bank account from its office by scanning a digital image of a check onto a computer and then transmitting the image to the bank.
  3. Combine your claims, EOBs and payments into a single database. Once funds are deposited into your account, medical staff must still take time to post them manually into their practice's Accounts Receivable database. The claims and the Explanation of Benefits (EOB) associated with these reimbursements, meanwhile, are tracked in their own separate databases.

It is now possible to combine all three functions in a common database using back-office outsourcing solutions available through some financial institutions. New technologies enable banks to receive both payment and copies of patient claims from insurers, from which they can create electronic EOBs, also known as 835s, customized to meet a practice's needs. An interface allows the information in this single electronic database to post simultaneously in accounts receivable, thus automating what is normally a time-consuming manual process.

These and other emerging solutions do more than improve cash flow. They reduce the demands on administrators and improve accuracy as well. That means more time can be spent doing what medical practices do best: providing excellent patient care. iBi

Jonathan Williams is senior vice president, Commercial Banking Division at Commerce Bank.

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