There are 6 habits that practice owners have, often for the sake of time, that will hurt their practices. It’s widely known that most businesses fail because of poor cash flow. These 6 habits directly contribute to negatively impacting your practices’ financial health.
Habit: Failure to verify
If your practice accepts insurance coverage, you must verify that coverage before the patients come in for their appointment. You want to know:
- Do they have an active policy?
- What does the policy cover in terms of your services?
- Do you need any kind of prior authorization in order to see them?
- Have they met their deductible?
- What (if anything) is their co-pay?
Failure to Collect
Practices lose money every year by not collecting money that is owed in terms of deductibles and co-payments. What you want to understand, and help your patients understand, is that you have a contractual obligation (as do they) to the insurance plan to collect those payments. It’s in your best interest as a business, to collect those patients upfront at the time of service.
Account Receivables (AR)
Another area where practices lose money is in the failure to follow up on AR.
Accounts receivable is the money that is owed to you by work you have already done. It’s often arranged in 30-60-90-120 days buckets.
In a healthcare-related practice, it includes claims that have been sent out and not yet received, claims that are awaiting action, and money that is past due from patients and/or payers.
It’s not uncommon for most of the money to be in a 30 days bucket, but you want the subsequent buckets to be smaller and smaller.
Failure to control spending is a problem in practices as well as other areas of life. Some of the more common reasons for this are:
- The practice/business does not have a budget.
- There is no inventory control.
- Someone is impulse spending.
The number one expense in any business is going to be staff. There are many expenses in order to have staff, so you want to make sure that expense to your business is not a liability. You’ll want to address:
- Do you have excess staff? Did you hire staff before you were ready?
- Is your staff cross-trained?
- Are they doing the work you hired them to do?
Some of us are relentless when it comes to reviewing our monthly bank and credit card statements, and others…not so much. This simple and quick task can say a lot when it comes to knowing where your money is going, not to mention discovering unapproved spending.
Understanding how to read these, and the monthly financial statements (profit and loss, balance sheet, cash flow statements) is crucial for your business’s financial wellbeing.
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Were you able to identify any habits you need to change? Or do you have a foolproof system in place that allows you to take care of each area? I invite you to share your thoughts, ideas, and/or questions in the comments below.