Cash flow is the lifeblood of every business. But it can also be the single reason innovative, promising businesses cease to exist. Medical practices face the same choice to either implement smart cash flow strategies or leave their practices at risk of unmanageable changes in cash flow and revenue. But certain nuances that are specific to healthcare make it even more important for medical practices to pay close attention to their cash flow.
Some of the top challenges facing medical practices include:
1. It’s difficult to turn bad ‘payers’ away. While medical practices are businesses too and survive on revenue, medical professionals have a hippiocratic oath which makes it more difficult to turn away patients who can’t or are unlikely to pay. Of course, this affects cash flow, but there is a human element that can’t be measured as easily.
2.Patients deprioritise medical bills over other debt. Store accounts, credit card debt and loans are readily prioritised over invoices for healthcare. This could be in part due to the fact that medical expenses are often unexpected, or alternatively that big companies can affect a consumer’s credit rating and therefore they are more likely to pay them first. For a cash-strapped economy, this trend could have devastating consequences on practices carrying a lot of bad debt.
3. Payment for one invoice can come from two sources. When treating insured patients, you will most likely collect payment from the medical aid and the patient. If there is a delay in submitting claims, collecting from the patient at the time of service won’t be possible. You will therefore need to follow up with patients only after you know how much the medical aid has covered. This can affect your cash flow, as studies have shown that the longer it takes to collect from a patient, the longer they take to pay.
4. The profound economic impact of COVID-19. We can’t talk about cash flow in 2020 without acknowledging the impact COVID-19 has had on the economy and patients’ ability to pay and/or keep appointments, further impacting a practice’s cash flow.
Many medical practices are facing this reality. In this ebook we discuss some best practice strategies you can implement pre-, during and post-consultation, to ensure your practice’s cash flow flourishes.
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