Too many chiropractors have a lingering problem with debt in their office — and it is literally killing their practice and their profits.
By debt, I am not talking about how much you owe on your student loans, your credit card or even how much business debt you may have due to capital expansion loans, lines of credit, etc.
The debt to which I am referring is bad debt, as in, uncollected accounts receivable. In other words, services you have already performed, but for which payment has not yet materialized.
While bad debt is obviously, well…bad, most chiropractors take a fairly nonchalant approach to its management. Certainly, this doesn’t help. But when you combine that with the fact that Bad debt has been on the rise since 2008, according to Transunion (the credit report agency) thanks, in part, to the economic challenges our country is currently facing. According to surveys of the healthcare industry, nearly 80% of the healthcare entities (from solo doctors on up to large hospitals) reported bad debt growth of between 6 and 20 percent since 2008.
In the era of $5000 or $10,000 deductibles and $50 co-pays, it is there therefore supremely important to collect properly from the patients in order to avoid the bad debt monster. Chiropractors need to utilize every tool available (basic and advanced) to streamline what is typically, the very labor-intensive task of collections.
Here are a few suggestions to avoid bad debt and streamline your collections process:
- Use online electronic payment tools. Your website can make it easy for you to accept practically any form of payment online and for patients to pay overdue balances in a self-serve manner. Done right, one could practically eliminate the use of paper statements with the proper combination of web based and preventative tools.
- Offer payment options. I do NOT recommend labor intensive post-dated checks, but use the streamlined efficiency of autodebit instead.
- Develop and rigorously follow payment policies. Too many offices have no official policies, or none that are enforced, concerning patients that cannot pay co-pays (and other prearranged payments) on the day of service. Will you tell them they need to reschedule? Will you call and collect payments before they arrive? If you see patients that cannot pay on the day of service then make it easy for them to pay you after the fact.
- Use a tiered approach to patient collections and match the collection effort accordingly. Some billing companies or billing staff strictly go after “low hanging” fruit and easy collectables, leaving large dollar claims or balances to stagnate and become uncollectable. Instead, systematically go after big claims, set up payments schedules and try to keep all balances current as possible.
- Use a monthly bonus system for employees that collect patient payments in the office. Make the amount meaningful and the metrics clear and easy to track. Incentivize billing staff with collections goals. Remember, these are services you already performed, if you can’t get paid, it is work you did for FREE!
Proactive strategies for proper debt management also avoid help you the last resort, low chance of success, guaranteed relationship buster that I definitely DO NOT recommend: the collection agency.
Hopefully, you can utilize some of the above tips and techniques to protect yourself from the growing monster of bad debt. Chiropractors should be proud of the good work that they do and be ready to charge a fair fee for that service. Paying promptly is a simple exchange for that service and any payment policies and techniques that you can do to ensure this are probably a lot more professional than slathering your clinic with “Will Work for Money” posters (although some of us may need a reminder one posted in our office!) that make it clear to all that we are not running a 501(c)3!