Patient statements: It's time to overhaul your decades-old collections strategies

Key Points

Redesigning your statements won't guarantee results, but it will improve your chances of collecting from patients, which is more important than ever these days. Research reveals that 30 percent of the average U.S. medical practice's revenue will be collected from patients in 2013, up from 12 percent in 2007. For dermatologists performing non-covered and cosmetic services, double these percentages. Any improvement in collections falls directly to your bottom line - and, frankly, it's an effort you can't afford not to make.

Here are 10 recommendations to re-engineer your statements:

2. Remove the boxes. Statements often display a horizontal row of boxes to illustrate the account's age - the first box indicating a "current" account at zero to 30 days due; the second, 31 to 60 days; the third, 61 to 90 days; and so forth. Seeing the amount move from box to box unchanged does little to motivate patients. Continue telling patients the age of the account, but don't rely on little boxes that are so easy to ignore. Speaking of boxes, don't leave the "amount due" box empty; fill in the full amount due. Otherwise, you are inviting the patient to enter a lesser amount.

3. Tighten the cycle. If you're still sending six statements to patients, you're wasting your money. If patients haven't paid by the third statement, they're not going pay at all. Remember, you've already asked them multiple times, including your pre-visit and time-of-service collections efforts. Supplement your verbal collection efforts by sending just three statements - one when the balance is due (at day "zero," not 30 days after the disposition of the account is determined), another statement at 30 days, and complete your statement cycle at day 60. If payment hasn't been received by 75 days after the balance became due, send a collection letter, not another statement.

4. Craft a collections letter strategy. Make your collections letter concise. State a specific due date, not something vague like, "payment is due in 15 days." Sign the letter, "Judy," so that when patients call for Judy, you'll know they are responding to a collections notice. That will cue you to send those calls to your best collector. When patients call to say they can't pay, don't automatically initiate a proposal for a payment plan. Instead, ask "What can you pay now?" Offer to take credit card information over the phone (it may be all you're going to get from this account). Then, ask "How much more time do you need on the balance?" Those questions put the onus on the patient to act. Patients who feel they're in control are more likely to make some attempt at payment.

5. Reconsider the sequencing of statements. There's no reason why you must wait 30 days to send another statement; mail semi-monthly instead of monthly. Transmit statements every day instead of the traditional once-a-week, mid-week mailing. This reduces the likelihood of getting a bolus of calls the following Monday, driving everyone in the business office crazy.

6. Attend to returned mail. The cost is high if your staff fails to process returned mail; statements will continue going to the incorrect address until the accounts are suspended or corrected. Let the post office do some of the detective work. Just print "address service requested" on the front of the envelopes so you will get notice of the forwarding address on file at the United States Postal Service (USPS) whenever someone has moved. It's inexpensive; contact your local USPS branch to get started.

7. Accept credit cards. In addition to requesting the patient enclose a check, delineate a section on your statement to enter credit card information. Credit card payments do cost you a few percentage points, but making it easier for the patient to pay will, in the end, make it more likely that you'll collect.

8. Be creative. Handwrite the patient's address. Stamp the envelope with a stamp, not a meter. Print on colored paper. Consider using an invitation-sized envelope. These ideas won't necessarily mean you'll get paid, but being creative ensures that your mail will at least be seen, instead of wallowing at the bottom of the stack of bills.

9. Add financing fees. Inform patients at registration of your intent to add a fee - flat fee or interest - to the third statement. Add the fee only if you can automate it; you certainly don't want your staff manually calculating and keying in fees on your statements. Be sure to check with the insurance companies with whom you participate about finance charges. If they prohibit statement charges, negotiate for it at your next contract renewal. If you do implement fees, recognize that they are a collection tool, not the latest and greatest way to make money. If patients call after receiving a statement charging them an extra fee, explain that you'd be delighted to waive the fee if they take care of the balance with a credit card number - right then and there.

10. Go online. Most industries rolled out online payment years ago. Don't be fazed by the technology leap you may have to make; implementing online bill payment is a must. While there is a cost to executing the system, the pay-off is significant. Cash flow is improved (consider that payments come in immediately, versus three to five days through the mail), staff time is saved (manual posting is eliminated) and variable costs drop to zero (postage and supplies are no longer needed).

The time is right for a redesign of both your billing statements and your approach to billing patients. Your efforts will make it easier for patients to pay and reduce billing and write-off costs for you. Best of all, your dermatology practice will be better off financially over the long term because it knows how to collect the money it has earned.

Elizabeth Woodcock is the principal of Woodcock & Associates and a speaker and writer specializing in practice management. Visit her Web site at http://www.elizabethwoodcock.com/.

Reference: "The 'Retailish' Future of Patient Collections," Celent, February 2009