How to Reduce Bad Debt

Are you getting paid on time?
It’s your worst nightmare – unpaid medical bills from patients you’ve already treated. Our research suggests that at the average South African private medical practice, potential bad-debt rates were running at about 17% in June. In October of last year, when one would expect patient benefits to have run out, the rate was sitting at 20%. Looks like this year, benefits are starting to run out a lot sooner!

The 120-day itch
For most practices, bad debt is any money that’s been outstanding for120 days or more – at which point it’s often just written off. But why should you even wait that long to be paid. Imagine going out for a nice dinner and only paying the restaurant weeks later! Yet that’s exactly how much of the medical profession works.

Time is money
Pharmacists and optometrists generally insist on upfront payment, because their clients walk out of the door with the product in their hands. But a doctor’s product is his time, and that’s as valuable as any pack of antibiotics or contact lenses.

Useful tips for reducing bad debt

• • invoice patients before they leave your practice.
  • Chase up unpaid bills on the day – or at worst, the day after; the first 24 hours are crucial
  • Make sure your invoices show exactly how much the patient owes and why; poorly presented bills are just another excuse for delaying payment
  • Make sure your invoices show exactly how much the patient owes and why; poorly presented bills are just another excuse for delaying payment
  • Make it as convenient as possible for payment to be made – for example, via EFT or credit card; most patients really do want to pay, just so long as it’s not a hassle

A growing trend
Research by McKinsey shows that in the United States:

• 15 cents of every dollar spent on healthcare, about 0 billion a year, is lost on claims processing, payments, billing and bad debt
• Patient liable portions for insured patients are set to grow from around 0 billion today to some 0 billion by 2015