What makes the difference between a booming practice or one stuck in neutral?
Or worse a practice with uncollected patient debts of hundreds of thousands a year?
According to HBN’s Billing Specialist Amanda Smith, the art is not about making money in the medical business, but in “keeping” it.
“I see practices every year lose tens of thousands – sometimes hundreds of thousands – through failing the challenge of keeping on top of efficient billing practices,” says Amanda.
She says while it takes years of training to become a doctor, medical school does not teach doctors the skill of starting up a practice – a monumental and sprawling task, with billing protocols frequently underestimated.
“Quite frequently doctors and the staff on the front desk are so busy with patient care, appointments and the running of the practice, they do not have time to resolve billing errors, or chase up outstanding debt in addition to keeping up with the day-to-day billing load.
Frequently I see very large practice debts and errors in billing that have not been resolved for years.”
Amanda has four degrees, including a Masters of Commerce (Accounting), a Bachelor of Management and Administration, a Bachelor of Science in Biochemistry, Physiology, Mathematics and Computing as well as a Diploma in Nutrition and Dietetics.
But as she well knows, you can have all the degrees in the world, but none of it matters if you don’t have prudent fiscal checks and balances in place.
A nominated Telstra Business Woman of the Year, Amanda’s focus now lies in establishing solid financial protocols in medical practices.
With a strong understanding of medical software systems and the legalities of Medicare claiming, she can maximise income generation and minimise company debt.
Here are just a few of the scenarios she has frequently come across.
Income leakage through billing errors – “Any errors that occur through the claiming process need to be dealt with immediately. As soon as the issue is resolved, the practice can get paid the correct fee. I have seen many practices with tens of thousands of dollars of claims not paid due to billing errors not dealt with – and this money is just sitting in limbo not being claimed.”
Collection Difficulties – Medicare will allow you to claim for bulk-bill services within a two-year period, but after this point it becomes more difficult to claim for outstanding payments, says Amanda.
“Health funds have a longer 5-year window of opportunity to claim payment, but past this point it becomes very difficult to obtain payment.
I have frequently come across practices with more than $100,000 of outstanding debt, inclusive of both Medicare and health fund payments – and the older the debt the more difficult it is to obtain payment.”
Not recovering patient debt – Consistently chasing outstanding accounts ensures that the business debt is kept under control, says Amanda.
“It’s not uncommon for a doctor to have $40,000 or more in outstanding debt at any given time if billing is not reconciled and debt not collected. And if you have a multi-doctor practice this debt becomes quite significant.
If I asked every surgeon in Australia what their practice debt currently was, 90% would have absolutely no idea, because most are focussed on their patients rather than on the minutiae of the billings. Someone in the practice needs to be responsible for this, who furthermore provides regular reports on the debt status to the business owners.”
Changing Fees – “Multiple times throughout the year, item number fees change for all payment entities ie Medicare, health funds and also DVA. This is something practices should keep on top of because if incorrect fees are present in your software system this would certainly lead to a loss of potential income.”
Not having a middle man – As doctors and practice managers often don’t have time to focus on the business side of things, increasingly practices are employing both an accountant and a billing specialist.
“This ensures all aspects of the financial business are being closely monitored, the accountant from a tax perspective and the billing specialist to ensure maximisation of income,” says Amanda.
To pay a billing specialist costs generally $80-$120 an hour compared to the generally higher charge of an accountant.
“Outside of costs, accountants never eyeball the medical software, so unless a highly competent practice manager or an external billing manager reconciles it, the accountant will generally not know what cash is missing in terms of unpaid debt. They will just see what cash is coming in and going out of the general account.”
Payments not being reconciled against the bank accounts – “Quite a few years back, I found $60,000 in cheques sitting in a practice drawer, cheques that had not been processed for many years, because none of the staff knew how to input them.
These days most of the errors are in the billing side of things and the medical software not being reconciled against the bank statement.
Most front desk staff do not have time to do this, do not want to do this or don’t know how to do this.
And sometimes doctors will not give front desk access to bank accounts because they want to protect their income confidentiality.
The problem generally also lies in the fact that frequently a practice will have someone to do the payroll and who pays the bills, but who does not have the expertise with medical software systems.
There is therefore a gap between the book keeper and the business’s software component.”
Fraud and theft – “In years past it would be quite common for staff on the front desk to be given the ability to delete invoices within the medical software system so they could get away with cash payment fraud,” says Amanda.
“This is certainly happening less today, however I recommend that no staff member that deals with payments be given the ability/access to change invoices. This should be allocated to an independent person within the practice.”
How HBN can help practices
Working in trusted partnership with Amanda and other industry experts, we can assist with
- Practice audit for financial leaks
- Revising management of cash flow
- Complex Billing Errors
- Financial Reporting & Analysis
- Project Management
- Dynamic Leadership skills
- Change Implementation
- Contract Negotiation