The normal item when I get asked to review a consultant’s invoicing process is the potential for weakness in the area of records on his/her part.
Sometimes, I’m presented with a carrier bag full of invoices, remittances, and receipts.
My favourite though remains the cardboard box stuffed full of pieces of paper.
That was the filing system.
Close examination of the pieces of paper in the cardboard box suggested they were invoices.
Many in fact did not have an invoice number on them.
Indeed the majority did not actually have the word INVOICE printed on them either.
That can be a problem when I come to reconcile payments against such payments IF they’ve been paid at all.
That is important because it’s difficult to contact an insurance company and discuss invoices for one individual patient if the invoice does not show a specific invoice number.
In fact, the only way you can tell them apart is if the values are different and they are on different dates.
It’s always best to have a unique reference number on an invoice i.e. an invoice number and a date.
And don’t forget to print the word INVOICE on it.
At least that way, you stand a chance of knowing which ones have or have not been paid.
Then the hard part starts as you begin to look at what is or is not on the invoice and get a feel for what was likely to be paid anyway and what was likely to be rejected due to total lack of detail.
Normally this is followed by a request to see clinic lists and the process of obtaining the right data off the clinic list for submission to the insurance company.
There is also an additional cost to not keeping accurate records.
When it comes to tax time, it’s going to take a lot longer – and thereby cost much more – for your accountant to do the necessary computations.
At worse you could end up paying too much tax.
All because records aren’t kept correctly.
Please keep accurate records if only because it means you stand a much higher chance of being paid!
Please email me if you want details of the bare minimum records you should be keeping for invoicing purposes.
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This issue came up recently with a consultant surgeon.
What is the difference between benefits and fees and how are fees accounted for against a benefits package?
Consider the total benefits payable under a patient’s policy. For example, the benefits payable is £100.
It could be more. The fees mentioned below could be higher too.
Against such a benefits package, fees are deducted thus:
£20 is paid out. The total benefits figure reduces to £80.
Subsequently, the patient requires surgery. £50.
This is also paid.
The accumulator reduces to £30.
Finally the hospital tenders their account: £20. The gasman submits his: £10. The benefits accumulator, therefore, reduces to ZERO.
The benefits package is equal to the fees.
If the initial is £21, the surgery £51, the hospital £21, and the gasman £16 then the total fees = £109. Against a total benefits package of £100.
Thus, if fees exceed the total benefits a shortfall will be created.
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I spent some time yesterday looking at the invoicing of a consultant surgeon.
I noticed that the invoices for initial consultations going out to one particular insurance company were being charged at exactly the same fee as for follow-up consultations i.e. £125 each.
Instead, they should be £175 for initial and £125 for a follow-up.
So… £50 multiplied by the number of errors spotted so far over the first month I’ve checked (9) = £450!
The bad news is that this has been happening for, so far as I can tell at the moment, for at least the last four months.
Potentially, £1,800 worth!
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A couple of examples recently where consultants who have tried to base their fees on the best rate available.
Take the consultant who realises that PMI company Num 1 pay £300 for a procedure whereas PMI company 2 pay £400.
He decrees he will charge PMI Company 1 the PMI Company 2 rate.
Right up to the point PMI company 1 receives the invoice for the higher amount.
They will decline to pay that fee.
Most likely they will shortfall it.
But, replies the Consultant, no problem.
The patient is ultimately liable for any shortfall.
I know of one consultant who even puts on his website “we use PMI Company 2 rates to calculate our fees and therefore there may be a shortfall which you will have to pay”
Yes, the patient is liable for a shortfall BUT not when the consultant is fee assured he isn’t.
Most likely a letter addressed to the Consultant will arrive sooner or later from PMI Company 1 pointing out that such “inappropriate billing” is not acceptable.
Carry on doing it and recognition is at risk.
It’s incredibly similar to unbundling.
Continue doing it over a number of months and for sure eyebrows will be raised.
Even if there is no “fee assured” status PMI Company 1 will be well aware of regular and consistent charges that are in excess of their published fee schedule.
Notwithstanding the above, of course, consultants want the best possible fee for a procedure but attempting to obtain the same by “inappropriate billing” is not the smartest way to go about it.
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Every time I give a presentation to consultants wishing to start a private practice it’s pretty much guaranteed, I’ll get asked about having a website.
In particular, I’ll be asked – do I need one?
Short answer: YES!!
Ah! – Comes the response from a fellow presenter with a very well established practice – I don’t have one.
I don’t need one.
That may be so because he is well established.
But for someone just starting out being on the private hospital’s website, just being on the PMI website or on a directory of consultants is not enough.
Neither is, although still a big source of referrals, having patients referred only by a GP.
Patients are very switched on.
They will trawl the Internet looking for whom they consider being a suitable surgeon with whom to book a consultation.
They may still ask their GP for an opinion. And then be concerned if the GP recommends another surgeon because the surgeon is a friend of the GP.
What does the GP do if he doesn’t know a suitable surgeon?
Yep – he goes to the Internet too.
The bad news is that it is not just a case of building a website.
I call it the “build it and they will come” principle.
Websites need to be maintained and refreshed – at least every six months.
Then there is the question of social media.
MHM doesn’t build websites nor do we manage social media for its clients.
It’s far too complicated.
We just pass on the requirement to one of our partner organisations.
Based on the analysis of MHM clients with a website and those without, it is pretty clear those with a website see more patients.
You sure you can’t be bothered with all this Internet stuff??
How many of you still rely on GP referrals only?
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At a medical conference recently a friend of mine was discussing the future of the private practice industry and what lay ahead.
My colleague shared the view that the “younger” newly appointed consultant is more adaptable to the direction of change in the private practice.
Thus they were a major driver in how the industry moves forward.
I say they are entrepreneurs.
Let me explain why.
Certainly newly appointed consultants cannot look forward to a hefty NHS pension at the end of their career.
The younger consultants are also facing a squeeze in fees from private medical insurance companies.
Not to mention they journeyed through a number of years to reach the position they are in now.
Yet they find themselves in an increasingly competitive market.
The market is more competitive than those who came before them.
The younger consultants are, so the evidence suggests, much more open to a business-orientated approach than before.
They have to.
In other words, the newly qualified consultant still has a mortgage to pay, mouths to feed, etc so is much more receptive to being an entrepreneur.
Say what you may but the fact remains the private medical healthcare environment is changing.
Just as the NHS healthcare environment is changing.
At the forefront of such changes will be the newly qualified consultant surgeon.
To adapt or take advantage of such opportunities as may arise, the new qualified are using technology as never before.
For example, they are much more amenable to the use of internet-based technology for marketing and PR.
They have to be entrepreneurial.
To prosper, let alone survive, they must invest in technology.
What is interesting is that they are more willing to do so than ever before.
To succeed with a private practice requires a significant amount of seriously hard work.
This is not to suggest the application of medical skills is not important.
But what is equally important are entrepreneurial skills.
Marketing, financial expertise, and business managerial skills for example.
These should not be assumed to be easy.
They now have to be acquired.
Consider that a consultant – newly qualified or otherwise – works within the NHS.
The NHS provides a support infrastructure including premises, secretarial support and, crucially, a constant supply of new patients.
In the private sector, none of these items will be supplied.
The consultant has to go out and actively find them for himself.
And that is why the consultant surgeon should be viewed as an entrepreneur.
Does anyone have a different view? I’d be delighted to hear from you.
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One of the most common remarks I hear from my guys is the number of patients they see in the NHS.
They literally have patients queuing up to see them.
Such a comment is normally followed by the opposite when discussing a private practice.
This, for me, confirms the absolute difference between the public and private sectors.
In the NHS, a consultant surgeon does not have to do much in order for patients to be delivered to them.
In the private sector, the opposite applies.
In the private sector a consultant surgeon, because fundamentally a private practice is a business, MUST attract a patient.
He must engage in pro-active marketing.
He must ensure it is known his practice is there.
First of all, however, he must comprehensively understand WHY a patient is choosing to go private.
It is not merely the case of a patient wanting to be seen private because he or she has private medical insurance.
It is understanding WHY the patient has private medical insurance. I, for one, dispute it is because private care is better than NHS care.
More likely it is because the private patient wishes to be seen quicker.
Even so, a consultant surgeon MUST engage in marketing.
If the patient can be seen at the private practice quicker than at an NHS location but the patient is unaware the private practice exists then all bets are off.
Therefore a marketing plan of some description is an integral part of a private consultant surgeon’s business plan.
And therein lies the reference to the first and absolute cultural difference between an NHS practice and a private practice.
In an NHS practice, patients will be delivered to the consultant surgeon without him even asking.
In private practice, patients will not just be delivered. They have to be attracted to the practice or more accurately to the business.
Note the use of the word BUSINESS for a private practice is a business.
This is not the time to discuss which marketing strategies will and do work best for a private consultant surgeon.
This blog is more concerned with highlighting that due to the differences between the NHS and the private sector, a private consultant surgeon has no choice but to have a marketing strategy.
Just as a consultant must have a robust infrastructure to support the business (secretarial support, invoicing, banking, etc), it is equally as important to have a marketing strategy.
Look at it this way, if any business does not have a regular number of customers or clients (in the case of a medical practice PATIENTS) then inevitably the business will not succeed.
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Taking ONE real-life client as an example.
Week ending Friday, January 31st: out of 15 consultations, 4 (four) came back with excess deductions £575.
So for a total of £2,500 worth of revenue from outpatient consultations £575 or 23% came back short.
Looking back to the same week in 2019, the number of excess was roughly half this.
The question as to why this is happening is not the concern.
The concern is what are you going to do about it.
If 23% continues the downside and potential loss to the consultant is significant.
There is only one real way to resolve this issue. Phone them!
Sure you can write letters and even email but nothing gets a response like a ringing telephone.
Most patients claim to be unaware of the issue but some think this is an issue between them and their insurance company.
In other words, the patient thinks they need to pay the insurance company.
They think the consultant gets paid in full by the insurance company.
There are variations on this but the crucial point for the consultant is not to establish why; its to ensure he recovers the excess efficiently.
But if telephoning the patient is the most efficient way to tackle the issue, it does not automatically follow its the easiest.
It has to be done professionally and with due diligence.
The long-suffering med-sec really won’t have the time to do this as professional and caring as she undoubtedly is.
I promise you faithfully, she won’t want to phone patients for money and will be thinking this is the least enjoyable part of her job.
There is an alternative though: do nothing.
Some patients actually will pay but this assumes they a) are aware of the excess and b) make it good straight away.
What if they don’t?
Assume it’s not £575 or 23% a week or £27.6k a year (£575 multiplied by 48 – not 52 weeks as you will have 4 weeks off a year).
Assume instead its 10% for 24 weeks (i.e. roughly half of the current numbers) and allows for some patients paying without being contacted.
The potential losses for the consultant, in this case, reduce to £13,800 per annum.
That’s a chunk of change in anybody’s book.
What’s significant is that at a number of client meetings recently I’ve asked what the client considered the biggest threat to the practice during 2020.
Most popular was a further reduction in private insurance fees.
That may indeed turn out to be a big problem.
But at this point, empirical evidence suggests its potentially leaving the back door wide open so to speak and enduring £13,800 worth of potential losses right off the bottom line.
I’d be really interested to hear from anyone who is seeing an increase in excess and their views on remedies.
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One of the most often asked questions is “how can I improve or increase my cash flow”.
The answer, as regards medical invoicing, is very simple to answer:
But what does that mean in reality?
It means aiming to be a winner
It means taking all the items that should be done and turning them into a MUST be done.
For example, I took a phone call from a consultant’s secretary this morning who wanted a favour.
She was struggling to get an invoice posted electronically.
She was trying to invoice BUPA.
Simple enough you may think but despite having a policy number, she could not process the invoice.
So how did it take me approximately 3 seconds to work out precisely WHY she couldn’t process the invoice?
She told me the policy number began BI-6000 etc.
That told me the policy number was not a BUPA policy number; it was a BUPA INTERNATIONAL policy number.
She was trying to invoice the wrong insurance company.
A quick fix to process the invoice, again online, to BUPA International and it sailed through. Sorted.
If standards had been raised to ensure that every single patient registration form had been completed correctly, this problem would not have occurred.
The invoice would have been processed the same day and payment made when required.
Instead, a shortcut had been attempted and the patient’s insurance company detailed incorrectly.
If standards had been raised to ensure this was checked and spotted the invoice would have been immediately processed.
There are no shortcuts if you want to get paid.
As it happens in this case the issue was already a week old before I took the phone call.
Thus an increase in cash flow – the outcome desired by the private consultant – was not being reached.
However, if you stop to think there are two questions:
When the patient was registered, why wasn’t the check performed to ensure the right insurance company was recorded because it should have.
What should have happened was the standards had been set too low.
If it becomes a case of the patient MUST be asked i.e standards are raised then this specific problem is never allowed to arise.
And that’s what I mean by raising your standards.
So why is this even more crucial as we work our way through 2020?
Because more and more private medical insurance companies are insisting invoices be submitted electronically.
The issue is not one of is that the right thing for them to do or not.
The real issue is that it is happening and standards must be raised to ensure you CAN invoice electronically.
In other words, if you don’t have all the right details it is much, much harder to process an invoice electronically.
You will instead have to re-contact the patient and get the right details.
Therefore it makes more sense to say you MUST get the details upfront and you must RAISE YOUR STANDARDS to the point of saying – the correct details MUST be obtained and checked.
I’ve even witnessed where an invoice can’t be processed because the postcode has been recorded as W01 (numeric) when it should say W01 (alpha) Incidentally.
Many times I’ve said insurance companies are not the enemy.
Even if I frequently disagree – I do on a daily basis sometimes – with some of their fees plus other items they do which are seriously irritating, all insurance companies will pay a private consultant IF (and only if) ALL the details are correct.
In other words, invoices must be raised to the correct standard.
Never quit. Aim to be a winner instead.
If you want to increase or improve your cash flow, the very first thing to do is to raise your standards in the area of invoicing.
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Top up (or GAP) invoices = asking the patient to agree to pay the difference between a consultant’s fee and the fee an insurance company is prepared to pay.
The discussion concerning them seems to take place more in whispers than anything else.
And sometimes they are even deemed to be almost a taboo subject because they don’t exist.
But they do.
So, and for the record:
I have no problem issuing them on behalf of my clients.
Why and when?
Consider the case of a real consultant surgeon whose patient is quite happy to pay, for example, £852 for a surgical episode.
But the patient is insured with XYZ Insurance.
XYZ will only pay a “customary and reasonable fee” of £639.
The fee was £852 but due to “market conditions” XYZ has reduced it by 25%.
Thus the consultant may now as part of his recognition protocol only charge £639.
Most consultants actually perform the same procedure throughout the month.
Empirical evidence using MHM clients confirms they all perform, in their own specialism obviously, the same code(s) on average 5 times a month.
If that code happens to be the one reduced by £213 each time, the reduction in revenue is over £1,000 each month.
In the original scenario though, the patient has chosen to see that particular consultant.
His/her decision has zero to do with fees.
That is the consultant the patient has chosen.
If the patient is advised the fee for their procedure is £852 but their insurance company will only pay £639 towards it and then if they – the patient – is asked beforehand to pay the difference and agrees, where is the problem?
Ah no, say the insurance company, you can’t do that for that is above our stated fee schedule so you are risking your recognition with us if you do.
This article is not about if they are right to potentially withdraw recognition if fees are not adhered to.
Neither is it about whether XYZ Insurance is right to reduce the fee.
The first thing consultants will all do is be deeply unhappy about the reduction.
The second thing they will do is attempt to mitigate the loss somehow or another.
And the second point is the more relevant one.
Many times I hear from insurance companies the market is contracting and cost has to be taken out to make the private medical insurance offering more attractive.
But why is the cost reduction, or so it appears, being continually directed at the consultants?
Yes, I am aware that certain fees have gone up but overall fees have come down.
I’m equally opposed to those consultants who insist on ignoring insurance companies’ fee structures for every single procedure and/or episode.
I’m also very focused on taking costs out of any business so I can see where the insurance companies are coming from.
But not at the expense of continually reducing a consultant’s fee and thereby reducing his profit continually AND the patient’s right to a choice.
Top Up or Gap invoices are a reaction to consultants continually seeing their fees being eroded.
I haven’t said I completely agree with them for they should be unnecessary.
What I am saying is that I understand why I’m being asked to produce them and when.
Consider an actual quote to me recently from a very well established consultant surgeon.
An orthopod who has been in private practice for over 10 years:
That, perhaps, sums up precisely why some MHM clients are asking me to produce Top Up or GAP invoices.
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It is marvelous how some private practices manage to make ANY money.
Actually, in one recent case, I’m not entirely sure the consultant concerned was making any money at all.
More frighteningly, the consultant did know if he was or not.
He didn’t know because he spent most of his time stumbling from crisis to crisis.
Either he hadn’t got enough patients booked to see him or he’d never sat down and thought about how he could get more patients. Scary stuff.
When I looked at his billing, it came as no surprise to realise he was weeks behind.
Cash or a general lack of it was becoming a big crisis for him for each month he was forced to inject money into the practice.
He literally was stumbling from crisis to crisis.
As I drilled down through the clinic list one item stuck out.
There was a complete lack of patient details. What details were available, were inadequate. Not good.
The scary bit was the realisation there was no formal plan to stop this getting worse.
He hadn’t allowed himself time to think about how to stop the issue from happening because he was stumbling from crisis to crisis.
This was having a major impact not only on his practice but also on his staff.
They were mightily fed up with lurching from one disaster to another and thus they voted with their feet.
So I recommended to him he immediately – and I do mean now!! – put a process in place that makes sure ALL patient details are correct.
But…to do so he must STOP, demanding of his staff they “drop everything” and sort whatever today’s crisis was.
As he explained to me, his stated desire was to stop having to put money into the practice in order to keep it afloat.
Instead, he wanted to take money out!
A very simple and absolutely perfect goal.
Otherwise, why be in private practice??
But to achieve his desire he needed to do one thing FIRST.
He needed to stop stumbling from crisis to crisis.
or to quote his words and not mine he “needed to stop being a busy fool”
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All MHM clients want to see more patients.
They want to grow their practice by taking advantage of the reported 7.5% per annum growth in self-funders.
Quite right too.
Self-funding patients are an opportunity to grow a private practice.
They want their practice to be a big practice.
Sadly, some make it hard for the potential new patient to make an appointment though.
For example, I called a client last Wednesday morning and nobody answered the phone. It wasn’t engaged; it just rang out.
The phone did not go to an answering machine. It just rang out.
Thus it was actually hard and not easy for a new patient to book a consultation.
If I had been the patient, frankly I’d have tried to book with another consultant.
It is not just the “small” practices that get it wrong. Hospitals get it wrong too. And so do insurance companies.
They all think big but act small.
There is one particular insurance company I speak with regularly who during the call have so much noise in the background, I literally struggle to hear what’s being said to me.
It matters little whether the practice, the consultant or the insurance company think I’m important.
What matters is that I hold the view I’m important.
I’m important because I want to make an appointment or resolve an issue that’s important to me.
I may only be ONE single potential patient but every single patient counts if you want to grow your practice or your business.
Your practice may have the best website ever.
The consultation rooms you use may be state of the art and look extremely professional.
Both suggest the practice is a big practice.
But if you don’t make sure every single patient feels they are the most important patient ever at every step of the way, you may not see more of them.
Every step of the way does not just mean in the consultation room, it means at absolutely every single step of the way.
One MHM client saw 126 patients in January 2020 with total revenue of around £35,000.
He hadn’t got time to see any more patients. His clinics are full.
His total revenue in 2019 came in at just over £350,000.
That makes his practice a BIG practice.
All because every single small patient is made to feel they are THE most important patient he has got.
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One of the very worst things any consultant in private practice can do is get involved when he shouldn’t.
When is that?
It’s when he or she is doing ANYTHING other than seeing or operating on a patient.
Otherwise known as “Return on Investment”, ROI in simple English means you invest £1 in the expectation of getting £1.50 or £2 back.
However, the investment made by a consultant may not be just financial.
It’s also the TIME invested in his practice too.
For example: if a consultant earns £150 per consultation and each lasts 30 minutes, he will earn £300 an hour.
Thus for each hour “invested” he makes £300
So why is it I’m always coming across consultants who won’t pay somebody else to do a job because that’s too expensive.
The consultant prefers to do it himself because it’s cheaper.
Unfortunately, whilst he is doing the task, he can’t see more patients.
Unless whoever he employs is charging him £300 or more to do a job, it’s actually cheaper to pay them to do the job and go see two more patients each hour.
Let’s assume it’s going to cost the consultant £100 to have a task completed by someone else.
The consultant will still be £200 better off.
But some consultants make it even worse.
Not only do they try to negotiate the lowest possible price they are prepared to pay engaging someone else to do a task (say £50), they then constantly interfere.
They interfere because they truly believe that they could do a better job themselves. That doesn’t actually make them right. It means they made the wrong choice in appointing the person to do the job in the first place.
They shouldn’t be able to do the job better than the person they appointed.
The ultimate sin is when they do indeed employ somebody better than themselves to complete a task but then constantly interrupt that person.
Effectively they are paying someone else £100 to do the job but also missing out on the extra 2 patients an hour worth £300.
Thus they are actually loosing out on £400.
A MUCH better idea is to find someone who can do the job better than you can, pay them LESS than you could earn in the length of time to do the job and then???
Let them get on with it!
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The patient arrives for the consultation. He hasn’t obtained a pre-authorisation.
Yes, of course, you should. Patient care must come first.
But the patient does not have a pre-authorisation! It does happen. It shouldn’t but it does.
How should this be handled? Ask the patient to immediately ring their insurance company.
Say the consultation was on Friday, January 24th and the patient calls the insurance company on Monday, January 27th.
The patient should make sure the insurance company knows when it took place.
In this example, the patient did not tell the insurance company it was Friday before.
When MHM tried to invoice, it was declined.
The consultation was before the date upon which the pre-authorisation was issued.
If the patient holds an insurance policy, which will not allow the backdating you’ll have even more difficulties.
This is not the insurance companies being unreasonable.
The patient has incurred liability on behalf of the insurance company yet the insurance company knows nothing about it.
Ultimately the patient is liable for the consultation fee of course so an invoice is sent to the patient.
The patient rings up (normally quite upset) and points out they are insured and are covered for consultations.
Numerous phone calls between the patient, the insurance company later, the issue is finally resolved.
The invoice is submitted to the insurance company and its paid in full.
It would have been paid without the hassle IF the patient had been asked by the consultant to tell their insurance company when the consultation was for.
If this is happening to you, it’s an issue you can address. Otherwise, you may spend 15 – 30 mins just sorting this out!!
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Most consultants are concerned, quite rightly, with how and why a patient has chosen to see them.
Before asking the question of why and how does a patient chooses you as a consultant an early question is asked.
Why have the patients taken out private medical insurance originally?
There are three major reasons.
Empirical research indicates most private healthcare originates via a patient’s employer. And the main reason for holding private cover is to avoid NHS waiting lists.
This is the primary reason patients have private medical insurance cover.
The second reason for having private healthcare insurance is that it offers the benefit of when and where.
Therefore, the patient can choose.
Aligned to this is the ability to recover post-surgery in a private suite and that may be more convenient to both the patient and his/her family.
Thirdly, and finally, private insurance offers a choice of a consultant to the patient.
Before considering why a patient should choose to see you, it is useful to consider why the patient has medical insurance anyway.
The major reasons patients choose to take out or receive private medical insurance are, in the main, three:
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There a few things I hear that automatically set alarm bells ringing when I look at the billing process of a medical practice.
“I’ll take a look at it next week”
“I’ll get round to it in a bit”
“I’ve been meaning to look at that”
The final of those items was said to me recently.
I was sitting on a panel facing an audience of medical professionals.
Among the various questions was one relating to how to monitor the invoicing efficiency of a medical practice.
To me the answer is simple.
Before you can measure any part of a business, you must first establish a standard to measure against.
Which is what I said to the questioner.
I asked if he knew how many invoices he had raised last month and the total value of them.
Sadly he didn’t know either.
But, I continued, to improve the performance of your practice you must know how you are performing against whatever standard you decide is appropriate.
Now consider the issue of invoicing with a real MHM example. One of my guys – a private consultant surgeon – saw 25 patients between Monday, January 13th, and Friday, January 17th.
Therefore I should see 25 invoices.
That is an ultra-simple which makes sure everything is invoiced.
If I only have 23 invoices I have a problem!
But it also means of course at the end of this month I can add up the number of invoices and also tell the client how many patients he has seen this month.
Then we can compare that number with the number the previous year and see if it is higher or lower.
The introduction of such a basic, basic, basic management control isn’t a nicety.
It is an absolute necessity if you are going to manage the invoicing process effectively.
The audience member agreed fully but then the alarm bells went off when he said “I’ve been meaning to look at that for a while now”
He hadn’t because there always seemed to be some other problem to deal with.
That tells me his management controls aren’t as robust as they should be.
It also tells me he is suffering from one of the worst and easily avoidable causes of business failures out there:
Procrastination is even worse than having a backlog of invoices to raise because it diverts you from identifying a backlog is building up.
Procrastination is even worse than having no cash because it distracts you from raising the invoices and thereby getting paid.
Procrastination is the cause of the problem he has because various insurance companies have declined his invoices for treatment as the consultation was more than 6 months ago.
Set time aside every single week to make sure, you DO invoice and to make sure you review what is happening with YOUR money!
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My Boss is Medical Healthcare Management Ltd.
And a very demanding Boss she is too.
She requires my undivided attention every single day of the week.
Even a private consultant surgeon has a Boss.
And it’s their own Private Practice.
Last Friday I was talking to a client. He is an ENT consultant.
I had to call him because he was three weeks behind in sending me his clinic lists. I also had to speak with him because he’s accountant had called asking for some data.
The accountant needed the data urgently so he could finish the year-end accounts for the consultant.
Apparently he’d been asking the consultant for this data for weeks and had been told to speak to me because I would have it. Indeed I did and it was emailed minutes later.
But it’s as I said to the ENT consultant, such data needs to be ready and able to be shared every single month.
The business demands it so it can calculate how much it can afford to pay him that month.
Just as the business demands clinic lists are sent the same day a clinic is held.
The consultant explained he didn’t have the time to do that.
Yet perversely, the consultant was complaining his cash input wasn’t enough to grow the practice.
The two, however, are absolutely connected.
If you want more cash into any business, you must invoice and then collect the payment.
And that means processing your clinic lists so they can be invoiced and then those invoices will be paid.
Compare the ENT client with another MHM client: a pediatrician.
He holds three clinics each week. After each clinic – literally, before he goes home – he scans his clinic list, password protects it and then emails it to me.
His cash flow is very strong.
His practice is a demanding Boss. She demands she is paid.
So he makes sure he keeps his Boss happy by processing his clinic list so she DOES get paid.
So how do you keep a demanding Boss happy?
Deliver what the Boss wants when the Boss wants it.
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We are in the people business.
That means you can’t run a private practice by email. Nor should you for we are dealing with people.
Reluctantly, that lead to one of the MHM clients having to dismiss his secretary in October 2019.
I’m one of the worst for trying to do things as efficiently as possible.
If I can’t see the point of doing something efficiently, I won’t do it.
But that does not mean I won’t answer the phone and speak both to patients and/or clients for they deserve some respect.
Ultimately, they pay my fees so they definitely deserve my respect.
It may not be the most efficient way of spending my time but nonetheless, if I don’t, I don’t make money. Simple really.
Yet the secretary referred to earlier didn’t understand that.
She was firmly of the opinion EVERYTHING could be done by email.
From answering a patient query to booking a patient consultation, everything had to be done (literally) by email.
When I called, the phone wasn’t answered. There was a message advising me to email her instead.
Potential or existing patients heard the same.
When she did reply – by email obviously – (normally the next day and that bugged me), her answer was often ambiguous. Thus another email was sent.
Another 24 hours and I received a second email that may or may not have resolved my issue.
Quite frankly if I had been a patient looking to book a consultation with her surgeon, I would not have been impressed that nobody could be bothered to even speak to me.
When I finally got to speak to her and complained she never answered the phone her response was magical.
She hadn’t got time to answer the phone because she had all these emails coming in.
So I risked certain death and pointed out, she was getting all these emails BECAUSE she wasn’t answering the phone.
Between January 2019 and September 2019, this particular MHM client’s practice hadn’t grown; indeed it had got smaller.
So much smaller that the client could no longer afford to employ a secretary and, instead, asked his wife to take over.
His wife started to answer the phone AND answer emails.
The number of emails reduced dramatically.
Patient numbers for October, November and December 2019 increased.
Thus far in 2020, patient numbers are going up again.
p.s. what inspired me to write this particular blog was a phone call I took from a patient this afternoon. I answered the phone and the very first thing the patient said was?
“Oh. You are a human being! I thought I’d get connected to a machine and have to press numerous buttons”
Think about that for a second, please?
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Not getting paid doesn’t happen by accident.
Something causes it to happen. There is ALWAYS A CAUSE.
If you leave invoicing until later (Friday for instance) it is very easy not to invoice at all. It can happen also if, for whatsoever reason, you leave invoicing until “tomorrow”.
Tomorrow turns into never.
Many times, I’ve been called in to examine and review the billing process of private medical practice and discovered an issue with invoicing frequency. So why is “tomorrow” “Friday” or “when I get the chance” the worst possible words for me to hear?
Nine out of ten times such an approach is a big clue as to the reason why the practice is not enjoying the level and frequency of cash it should be.
If you want to ensure your practice is paid promptly, the very first place to start is raising an invoice. It is crucial. And invoices should be raised DAILY!
Once a week is not helpful.
The danger in invoicing on a Friday or a Monday or only on any set day a week is if something happens that day – for example, the consultant needs a clinic booking urgently or a patient needs a letter immediately, then the invoicing gets left behind.
And that is normally the cause of the problems.
If invoices are raised daily should something happen to delay that ONE day’s invoicing, it is corrected the very next. There is no backlog.
Let me give you a real-life example.
Tuesday, January 7th a consultant ran an outpatient clinic and saw five patients. Three follow-ups and two initial consultations. £850 worth of consultations.
Yet invoices were not produced for this work until Monday, January 20th, – one day short of two weeks later!
Is it any wonder the consultant was extremely dissatisfied with the practice cash flow?
It didn’t take long for me to identify that on twice previous occasions over the previous few months one entire clinic list had NOT been invoiced (worth £725) and three initial consultations (worth £600) had also not been invoiced.
In the case of the initial consultations, insufficient insurance details had been obtained at the point of registration and remedy had been left until “later”!
In all £1,325 worth of invoicing had been missed.
No wonder cash flow was poor.
But before we go any further do NOT blame the medical secretary. She has enough to do. The phone rings or she has to meet and greet the patients. She has numerous letters to type.
That is precisely what she should be doing for she is there to ensure the “front of house” runs smoothly.
The error, if you will, is then expecting her to fit invoicing in around all that or, as was suggested to me, in her “spare time” WHAT SPARE TIME?
She hasn’t got any and nor should she.
In the above example, the solution was obvious.
Either get someone in to process all the invoices and the cash receipts or outsource it.
Private medical practice is a business. It must be managed as a business; end of.
Without putting too fine a point on it, failure to ensure the invoicing and accounts process is not 100% efficient is pretty much guaranteed to lead to the business having cash flow issues.
DON’T LEAVE IT UNTIL FRIDAY – GET ON WITH IT!!
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Two different MHM clients – both consultant surgeons – have been advised by a specific insurance company that the fees for their initial and follow up consultations are being reduced.
They are not amused, to say the least.
But what can they do about it? Nothing.
Actually, that’s not strictly true. In a perfect world, there is much they can do. But we don’t live in a perfect world. We live in this one.
In a perfect world they can, for example, pass any reduction in fees on to their patients.
Save of course their recognition agreement with the insurance company forbids them to do so. If they do they are at risk of de-recognition. Ah came the reply, the insurance company won’t find out. Yes, they will.
Or they can stop seeing patients referred to them by that specific insurance company.
In both cases during the last half of 2019 that is over £10,000 worth of referrals.
Both would suffer double percentage digit drops in private practice turnover. That is not good.
Both of these consultants, however, are by no means stupid.
Neither of them just reacts.
An immediate reaction is potentially the worst thing to do. Indeed many years ago MHM worked with one consultant who did just that when denied a fee by an insurance company. He even went so far as to tell the insurance company concerned unless they immediately put his consultation fees back up he would forgo his recognition with them and refuse to see their insured patients.
They didn’t so he did.
And immediately saw a 23% drop in the private practice turnover. Do NOT react.
What is required is a considered response to all the options.
In the case of the MHM clients, I calculated what the drop-in consultation fees would mean over a six month period against an assumption that the lack of referrals would lead to 25%, 50% or a 100% drop in patients from that specific insurance company.
In all cases, for obvious reasons, there was a loss. But at least that loss was now quantified.
It is worth noting that the drop in consultation fees would not impact in a drop of surgical fees because surgical fees were excluded from the reduction.
That said a refusal to see patients from the specific insurance company concerned due to consultation fee reduction would automatically lead to a 100% drop in surgical fees as clearly if a consultant does not see a patient, it is extremely unlikely he’ll take that patient into theatre.
Sadly there are only two options in reality: accept the reduction or don’t accept the reduction.
I’m afraid the insurance company really is in the driving seat when it comes to setting their fees and there is little a private consultant surgeon can do about it.
Many years ago a private consultant surgeon could charge what they liked and to a certain extent with a self-funding patient, they still can. However, with insured patients, those days are long gone.
Rightly or wrongly, those days are over.
So what should the private consultant surgeon do?
MHM suggests an analysis of how the reduction will impact on the private practice should be undertaken.
That will at least quantify how the reduction will impact on the private consultant surgeon in actual financial terms. All the data will be contained on a sales ledger and with the aid of an excel spreadsheet, it’s relatively easy to perform the analysis.
Such an analysis also confirms how the reduction will impact on MHM for MHM charges a percentage of what is actually paid to the consultant. If that figure is lower then the MHM fee will also be lower. In other words, the pain is shared.
Thus I don’t like it any more than the private consultant surgeon but I can’t do a lot about it either.
The bottom line remains to accept the fee reduction or reject the fee reduction.
That I’m afraid is the reality.
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