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 By Neil B. Gailmard, OD, MBA, FAAO, Editor September 23, 2009 - Tip #398 
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Preventing Patient Accounts Receivable


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Additional Information

Last week's tip focused on collecting past due balances from patients, but it would be far better to prevent the debts from occurring in the first place. So let's examine the most common reasons why unpaid amounts end up on the patient's ledger in the first place and what steps you can take to collect more fees at the time of service.

Office policy

I assume you have a policy that requires all fees (not billed to insurance plans) to be paid at the time of service or, in the case of optical products, that balances are paid at the time of dispensing.

If you don't have a policy like that, implement it today. There is simply no reason to offer credit directly through your office when national credit card firms are so plentiful and easy to do business with. It doesn't matter if your practice is in a small town or if the local population has lower incomes, there is no need to offer any payment plans. Any slight improvement in sales will be offset by bad debt that you end up working to collect and then writing off.

How does bad debt happen?

Even with a pay as you go policy, there will still be plenty of dollars owed to your practice by individual patients. Here's why:

  • Services that are billed to an insurance plan are not paid as expected (or as hoped) and the amount is transferred back to the patient. Of course, there may be contractual agreements that prevent this transfer back, but in many cases it is allowed, especially if an advanced beneficiary notice is signed.
  • Special circumstances cause staff or doctor to make an exception to the payment policy. This might be a patient with financial problems or it might be a patient who wants to purchase several very expensive items at once and asks for credit.
  • The patient does not know that the fees are due. One example might be a patient who thought his exam would be covered by insurance but is told at checkout that it will not. Or the teenager who stops in to pick up his new glasses with no parent and does not bring a check.

How to prevent bad debt

Here are my suggestions for how to minimize patient accounts receivable, especially due to the reasons noted above.

  • You can't always prevent insurance from not paying, but it can be minimized if you only participate with plans that you know are easy to work with. Drop plans that are unpredictable.
  • Get tougher on what you agree to bill to insurance. When you have a choice, just tell the patient that a special service is not covered and that the fee is due at the time the work is done. Doctors often assume that the patient will opt out of care if it is not covered, but I find that to be very rare. Let the patient file his own claim to be reimbursed. For example, I don't bill medical insurance for contact lens fitting for keratoconus.
  • Use an advance beneficiary notice whenever you want the patient to know that insurance will not cover a service. Medicare and some plans may have specific forms and wording, so check the carrier website.
  • Be firm on your policies. You can still provide excellent customer service and not offend patients; in fact patients will respect your integrity when they test you and find you can't (or won't) bend the rules. You'll be surprised to find the vast majority of people who ask for special payment options still get out the credit card or checkbook when they are told no.
  • If you sell very expensive products or services, look into national consumer credit firms. Your office gives the patient a simple application form and faxes it in for financing approval within minutes. Your practice pays a fee for the financing but you are paid in full right away. Several of these companies specialize in health care.
  • Tell patients in advance if fees will be due. I've written about this many times; just tell people the fee in advance and most problems are eliminated.
  • Know how to handle awkward situations. That teenager who comes in to pick up the glasses was probably sent by a parent who knows your policy of requiring payment. The kid may not know or may know and act dumb, but when we are faced with that, we do not dispense the glasses or contact lenses without payment. We simply apologize profusely for not having told the patient about the policy (even though we know we did) and we suggest calling Mom for a credit card number. If that doesn't work, we offer to hold the item until he can return with the payment. And we apologize again.

Best wishes for continued success,

Read Past Tips Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week


A Proud Supporter of

Send questions and comments to neil@gailmard.com.

Dr. Gailmard offers consulting services to eye care professionals through Prima Eye Group; information is available at www.primaeyegroup.com.

Please Note: The views expressed in Management Tip of the Week do not necessarily reflect those of the sponsor.

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