This article was originally published in a sponsored newsletter.

As practice owners, our focus on growth and key performance indicators (KPIs) such as capture rates is crucial. However, too many practices fail or have cash flow issues even when all their KPIs are on track. If your practice health is suffering, be sure that you are effectively collecting the revenue you have earned.

Components of Collections: Reporting, Patient Payments and Third-Party Payments

Aging Reports

When there is money outstanding, it's called a balance or receivable. Aging reports help us understand how many days balances have been past due. When was the last time you checked your patient or third-party aging reports? It's essential to create a system for regular checks on these reports even if you have a team or company managing them. Every month, request both a summary and detailed view of the reports for all aging over 30 days, grouped by plan and including patient details.

When you look at the summary report, your first goal is to benchmark where you are now. How much money is in 30 to 60 days, 60 to 90 days and 90+ days past due? Track these categories each month to see whether they’re going up or down. If your team knows you’re going to review these numbers with them, it’s an added incentive for them to put in the extra effort to get the numbers down.

Make sure your detailed aging reports are in an editable spreadsheet, and then add extra columns for last contact date and notes. These two fields allow visibility into the process for each entry. Do we know the status of every patient and are they being followed up? This spreadsheet becomes an invaluable tool for whoever is managing your insurance claims or patient accounts and provides data for you to ask questions.

Regular reviews not only prevent revenue loss from unattended insurance claims, but also highlight other potential issues, such as glasses that still have a balance sitting in your office until they’re picked up. Alternatively, sometimes these reviews reveal that many patients have credits on their accounts, which also needs to be understood and managed.

Patient Payments

Once you’ve benchmarked where you are, implement strategies to reduce the patient balance in the first place. Start by collecting fees at the time of service. When selling eyewear, it’s common practice to request a deposit with the balance paid upon pickup. However, this method is not the most effective for collecting revenue. Your cash flow suffers because you have to order the materials before collecting the money, and the longer the glasses take to complete and get picked up, the more your unclaimed revenue increases. As a one-time exercise today, take a walk over to the lab, look at each tray and assess how much money is tied up in glasses that are in progress but have not been picked up. See my point?

It can be nerve-wracking to request full payment upfront, especially for high-cost items like $800+ glasses, but how we phrase payment requests can influence customers’ willingness to pay. Instead of telling patients you require at least a 50% deposit, just say "How would you like to pay?" If the patient wants or needs to pay in phases, either accept a deposit or offer Care Credit. Such minor adjustments in communication can significantly affect revenue collection. An added benefit is that customers tend to pick up their glasses quicker if they don't have a remaining balance due at pickup. It’s one less reason to wait until later.

Third-Party Payments

Third-party payments are broken down into Vision and Medical claims. Vision plans typically pay within 45 days so, if you have a significant balance in your 60+ days past due category, it likely has to do with delays in your processing. Medical insurance claims often make up the bulk of a practice's receivables. There are experts that can help you with medical billing strategies and it’s beneficial to utilize them as needed.

Remember, regardless of your team’s strategies or whether you outsource billing, review the patient and third-party aging reports with your team. Your practice health relies on it.

Evan Kestenbaum is a lifelong entrepreneur and data geek who has co-founded and led several successful businesses within eye care. His latest project provides resources and advocacy for people who stutter. Evan enjoys spending time with his wife, Paula, in their most fulfilling role: parents to three adventurous daughters. For questions or comments about this article, please contact ekconsulting@gmail.com.