Woodcock Wisdom: Creating Payment Plans that Actually Work, Part 1
Elizabeth Woodcock is our guest blogger for the next four weeks. We're extremely excited to introduce Elizabeth, a widely-reputed consultant, speaker and author who has championed improvement in medical practice operations and revenue cycle management for nearly 20 years. Her experience spans consulting with medical practices of all sizes, delivering educational sessions for the MGMA and AMA (among others) and authoring or co-authoring four books. She is frequently published and quoted in national publications including The Wall Street Journal and Family Practice Management.
Today, Elizabeth offers the first four steps to creating payment plans that actually work. Please check back for a new installment of Woodcock Wisdom weekly.
Financial accountability for medical care is rapidly being shifted into the hands of patients. Self-pay patients—and those with large deductibles—may be unable to pay the amount due in full. In order to accommodate patients, as well as maintain a healthy bottom line for your practice, institute the following strategies to effectively execute payment plans:
Establish parameters. Creating protocols for the minimum monthly amount and the maximum time frame for payment enables your administrative and billing staff to interact more efficiently with patients. Develop a grid for your staff to reference. For example, if a patient owes $300, the grid would outline three $100 payments. When the total balance is not a round number, always request the residual amount in the initial installment. (In the case of a $381.94 balance, the initial payment would be a $181.94 followed by two payments of $100.) Thus, the remaining round dollar figure can reduce patient confusion in paying the amount owed.
Don’t get suckered. A payment plan is not a payment plan until the first installment is paid. Otherwise, it’s just a promise – and one that patients will make just to get you off the telephone (or to move past the front office).
Encourage patients to agree to a twice-monthly payment plan. Factoring in the patient’s hourly wage (or salary) plus receipt interval of paychecks can result in a lower need for payment reminders. The twice-monthly plan can also reduce the dollars that the patient needs to pay at one time, and thereby increase the likelihood of payment in full.
Reduce the cost of administration. An automated, e-mail-based system with a link to your online bill payment system – or a secure credit card on file program – is a solid strategy, as it allows your practice to reduce the time, effort and expense involved in acquiring and managing payment plans. That said, if you do choose to mail notifications for each payment due, your can save money on staff time and related office supplies and postage by trying this cost-savings measure: create a payment coupon book for patients and provide them with self-addressed envelopes.
Payment plans are an important component of the revenue cycle strategy of a medical practice, particularly as financial accountability is shifted to the patient. By creating payment plan protocols, you can maximize the time and effort on the part of your staff - and help your patients cope with this fundamental shift in responsibility for payment.