A recent article on CNNMoney discusses the not-so-new news story about the financial struggles of private medical practices. However, buried within the article is an important financial issue that many physicians overlook: collection of patient balances. According to one of the experts cited in the article, private practices lose 10% to 15% of their profits in uncollected patient balance revenue.

I’ve worked with many medical practices over the years on dealing with this issue and understand why physicians are reluctant to pursue aggressive patient balance collection efforts. Perhaps chief among their concerns is that physicians are afraid unhappy patients will sue or file a complaint with the Board of Medicine. Given the ease with which patients can file complaints with medical boards or, even more easily, post negative feedback on the Internet, this line of thinking is not without merit. However, having strong collection policies and making your patients aware of them upfront can go a long way to improving your bottom line and improving your patient relationships. Here are a couple of tips for developing collections policies within your practice:

• It should be a standing policy that, with only an occasional exception, patients should pay their balances at the time of service. When staff send follow-up appointment reminders, they should also remind patients to bring payment at the time of service or they will need to be rescheduled. Obviously, exceptions may need to be made to this policy where a patient’s health may be jeopardized by a delay in being seen.
• Office staff who deal with patients at scheduling and check out should be trained on the collections policies so that they know what to tell patients and what procedures they must follow to ensure payment.
• Patients should be made aware of the practice’s collection policies. It’s a good idea to post notices your office regarding collections policies. That way patients know what is expected of them and can’t claim ignorance.
• If you use a collections agency, be sure you have a clear understanding with the agency regarding the procedures they will use to collect patient balances. Among other things, you should review and approve the language in collection letters to be sure that the language is professional and not overly harsh.
• Be sure to check applicable law and your third-party payors contracts to be sure your collection policies are compliant.