Have you ever consider where your practice really is in terms of medical billing?
This is the routine I follow:
What do I look for? Precisely where the Practice is now.
When? The very first day
It seems the most obvious place to start.
It is.
But numerous times a practice doesn’t really know what is happening in terms of invoicing and billing. That, if you think about it, is crazy.
It may well be the practice principals think they are owed too much money but seldom do they consider the three most fundamental questions of all before they may reach their conclusion.
In any event “think” is not good enough. You need to know. You MUST answer three fundamental and parallel questions FIRST.
How much are you owed?
Do you know how much? How can you be so sure it is the total amount you are owed? Does it include every single piece of work undertaken in the practice?
In other words, is there a sales ledger (sometimes known as a debtors ledger)?
You would be surprised how many times I’m told the figure is £X based on a sales ledger the practice accountant produced four or even five months ago for the last financial year-end of the practice.
All that does is confirm the position a number of months ago.
That is not good. The data should be no more than 30 days old i.e. if it’s November 20th, 2019 today then that data should be no older than August 20th.
Therefore you need to ensure the information really does confirm how much you are owed. Does it?
If the data is “out of date” then that may indicate it too is inaccurate.
For example: if the sales ledger indicates most of the money is overdue then the supplementary question of “who says?” springs to mind.
Taking the above example of a report being between four or five months old, some of the amounts WILL have been paid either in full or partially.
How many have been paid?
Have such amounts been allocated to the sales ledger?
Was such an allocation accurate?
Therefore you must make sure the information you are looking at is the most recent that is available. Is it?
For example, I recently reviewed the sale ledger of a private practice covering three surgeons who were firm of the opinion they were owed “a fortune” by the various private medical insurance companies.
Yet when the analysis was completed between 20-30% of the overdue balances were actually down to shortfall and excess payments.
They aren’t due from any insurance company; they are due from patients.
Therefore you must make sure you really do know who owes you the money. Are you sure?
Look at it this way: you may have the greatest sat nav on the planet in your car but if it cannot confirm precisely where you are, don’t bother telling it to route to Glasgow. Or to London. Or to Birmingham. It won’t get you there!
pete@medicalhealthcaremanagement.co.uk
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Following a recent blog regarding websites, I was asked my view of social media eg Twitter or Facebook. Whilst in my view a private surgeon should have a website, social media may not be the right place to be unless EXTREME care is exercised.
Any social media utilised by a private surgeon which also allows a patient to post comments thereon might well be a recipe for disaster.
Consider the untold damage if the patient posted on-line the care by the Surgeon was first class but the standard in the hospital was awful.
Guilt by association. Even worse if the patient posts online that the care administered by the surgeon was poor!
One consultant recently expressed the view that the only difference in 2019 to when he started many, many years ago is that now patients no longer merely gripe to friends and family. They can also go online.
An excellent point indeed.
His view is to always perform the best job he can. Just as he should do. That will stop patient complaints. But sooner or later somebody will complain.
MHM is often asked the question which clients have the healthiest private practice. For sure, those that have a website tend to fall into this category. Interestingly though, not one of those clients engages in social media.
So the conclusion may well be not only could social media be a dangerous place to be but, thus far, it has not proved to generate additional patients either.
pete@medicalhealthcaremanagement.co.uk
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I left school more years ago than I care to remember. Then as now I make sure I do my homework though. The only difference is now I do it for private medical consultants some of whom are thinking about starting a private practice.
All of you have done your fair share of homework in the past.
The journey to becoming a surgeon is not exactly an easy one. Lots and lots of work, study and long, arduous hours. There is lots of homework on the way too. Followed by even more work, study and long arduous hours. There is even more homework thrown in after that. Then you are qualified.
But to start a private practice add on about five years of post qualification experience and hey presto you decide to open a private practice! That is more or less the path a surgeon (friend of a current MHM client) took.
I was asked to go chat to him about starting a private practice.
As the geographic area concerned contained a major urban conurbation, the population numbers were high. So that ticked the first box!.
There were three private hospitals within a 25-mile hospital too. The second box ticked.
When I checked the number of consultants at each hospital (Google is a mine of information) there were 22 at the first, 15 at the second and 15 at the third. The third box ticked.
I’d done my homework and established there was a demand for my surgeon’s specialism within the area.
The surgeon, when we spoke, was really pleased to hear the results and was in no doubt my homework confirmed he would be able to start a successful private practice.
It was that last item – the number of consultants already in place – that concerned me.
Could it be that the demand for his specialism was already being satisfied by the 52 consultants already providing his specialism?
My surgeon friend would have to compete with those consultants.
He would have to market himself to potential patients and see enough patients to make his private practice pay. His fees from private insurance companies would have to be sufficient to cover his costs AND make a profit.
He would have to provide all the support facilities to run his private practice which would cost money.
Then he would, of course, have to pay tax on whatever was left.
Let me be clear I was NOT saying don’t start a private practice. I was suggesting that the demand for his specialism might already be satisfied by his competitors.
He should, therefore, be fully aware of the difficulties he would face BEFORE he started his private practice.
All because I had done my homework.
pete@medicalhealthcaremanagement.co.uk
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All MHM clients are very dedicated individuals. Having spent years training, they then go on to work incredibly long hours.
All at some point, however, they then decide to start a private practice. It’s unlikely they would be my clients otherwise if you think about it. They start a private practice because they wish to make more money.
To have any other objective is either (a) silly or (b) engaging in self-delusion. There is no shame in admitting you start a private practice to make more money even if you love what you do. However…
As I’ve blogged many times previously, it must be run as a business. A business with more than a little social conscience< Nonetheless still a business. Yet, sadly, many consultant surgeons make the mistake of believing their practice/business will grow and make them rich if they continue doing what they love to do i.e. help patients.
Sadly that is not true for doing what you love seldom leads to long-term financial success.
And that means, as much as you love being a Private Consultant Surgeon, you must measure the performance of your practice/business. This is the point the private consultant surgeon realises he/she must learn to understand financial analysis i.e. the numbers.
It’s not all that complicated actually. Supplying data to your accountant every year isn’t the same as understanding the numbers behind your practice though.
Let me give you a real example. I was contacted recently by an established private surgeon who, he claimed, appeared to be working all the hours God sends but said he was always broke. It didn’t take long to work out why.
The first good indicator was a complete lack of financial analysis other than a tax report a little over one-year-old. No debtors ledger was available so the surgeon didn’t have any real idea how much he was owed. Indeed it transpired both patients and insurance companies were only invoiced monthly.
So I took the last six months worth of clinic lists and checked how many had or had not been invoiced. Quite a lot had not. I did the same with surgical episodes with the same result. This was followed by an investigation into how much had not been paid even if invoiced.
But it was also a simple case of adding up the total revenue generated for each month, calculating the total costs (room rental, monthly indemnity insurance premiums, secretarial costs etc) and subtracting one from the other. Even if any type of provision for tax liability was ignored (bad move!) the results were not encouraging.
The really bad news is that the consultant looked very blank when I asked which percentage of patients were referred to him from which source i.e. how many GP referrals, private referrals, recommendations from previous patients, insurance company referrals etc.
It was clear this particular consultant had no real idea of how his practice or business was performing.
pete@medicalhealthcaremanagement.co.uk
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A consultant surgeon sometimes does not understand how valuable his time is.
All MHM clients are incredibly busy. I’m amazed at the volume of work they get through in a single day. They are either on-call, doing a ward round or in theatre. Then they have to see their private patients. That explains why most of them call me either very early in the morning or in the evening. One prefers a Saturday morning. It doesn’t bother me. It’s my job to fit in around them and make their life easier.
Recently, however, I was asked to review the private practice of a consultant who was having serious difficulties generating any cash into his practice. And following my question to his medical secretary, it didn’t take long to establish why.
The question was: what is the biggest problem you have this week. The reply said it all:
“I never get a response to the queries or receive the information I need after I’ve asked Mr. Surgeon. He always seems too busy to deal with the things I need”
The situation was despite leaving messages on his phone or emailing him, seldom did Mr. Surgeon respond. He was too busy. Yet most of the information the med-secretary needed was fundamental to generating cash into the practice. For example, two clinic lists a week ago (result: no invoices sent out) or remittances from an insurance company (no idea who had or hadn’t paid) or the post Mr. Surgeon picked up and put in his bag one-day last week (it had cheques from patients in it)
So I sat down with Mr. Surgeon and asked him what he thought about it. His response was a classic: “I just don’t have time to deal with all that. Patients are paying to see me so they must come first”
I agree with him.
Sadly however therein lies the cause of the issue.
The reason Mr. Surgeon is having difficulty generating the cash is due to him not dealing with such issues as the missing clinic lists or not passing over remittance advices.
Mr. Surgeon needed to make very sure, the support facilities of the practice were dealt with. The word “support” suggests these things can be demoted to a “They are not that important so I’ll deal with it later” category.
Sadly they can’t.
Eventually, they catch up with you. In the case of Mr. Surgeon, they were the reason he was struggling to generate cash into his practice.
Mr. Surgeon is a very safe pair of hands and the patients love him. He’s a nice guy as well. But he needed to change ONE SINGLE THING in the way he works. He needed to put aside an hour a week to make sure he’s covered all his administration too.
So he did.
And within a month Mr. Surgeon was pleased to see not only more cash coming into his business but that he wasn’t being chased by his med-sec so often.
In case you are wondering why I don’t have such issues with MHM clients its because every single week my clients take their post or clinic lists etc scan them to me and promptly proceed to forget about them afterward.
pete@medicalhealthcaremanagement.co.uk
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I argue with medical insurance companies all the time.
Let me, however, be very specific about when and why I argue with them. When I think they are wrong or when I think they have made a mistake, I challenge them.
A real example from this morning will illustrate why and when to argue with an insurance company.
MHM has a client who performs a specific test at a consultation with a patient. He has done so on more than one occasion and with patients holding cover provided by all the major insurance companies, I’ve invoiced for him many times. Per normal MHM won’t reveal who the client is, his specialism or indeed the true value of his charges. For the purposes of this example please assume the charge is £125 for the consultation and £75 for the test.
The invoice was raised and sent electronically to the insurance company. It detailed all the correct details i.e. patient’s name, complete address, date of birth, policy number, pre-authorisation number. The correct CCSD code for both the consultation and the test were used. It indicated the correct price for each and a total value for the combination involved. In other words xxxx (the consultation) = £125. The yyyy (test) = £75. Total value = £200.
Surprisingly, when the remittance arrived electronically from the insurance, only the consultation had been paid. A note appeared on the remittance advice stating it was not possible to charge for a consultation and that particular test at the same time.
Except, you can.
Before picking the phone up to call the insurance company concerned I first visited the insurance company’s website. The codes were correct. The fees for each code were spot on. There was nothing to indicate that the combination could not be charged. I was certain before I’d checked that I was right. But it doesn’t hurt to check. I could have been wrong. More likely the rules had been changed without anyone being told.
Establishing the facts is vital when raising invoices for medical billing. Actually its true of all commercial situations. But what is a fact? What some claim to be facts turn out to be anything but sometimes. In this case, though the facts were as I thought them to be. It was perfectly acceptable to charge the two codes together. Only then did I call the insurance company.
I asked WHY this particular charge had been reduced? It was explained to me that the combination was invalid. It was unbundled. Except I insisted it was valid, It was not unbundled. The insurance companies OWN website said the combination was permissible too. The phone went quiet for a while and then I was told the insurance company was wrong and I was right. The £75 would immediately be paid to the consultant involved.
Despite what you may think it is not unusual for an insurance company to make a mistake, admit they have made a mistake and then rectify it straight away.
Don’t, however, call an insurance company and twist the facts. Don’t call them and say their fee isn’t right and should be much higher. That is not a fact. It is an opinion. When faced with a combination of codes that can’t be charged together do NOT separate them onto two invoices one being sent on a Monday and one on a Tuesday. Don’t unbundle. Insurance companies may make mistakes but they aren’t stupid.
Its very much a case of “picking your arguments” and challenging an insurance company in the right way and on the right subject.
But is also very, very much a case of noticing that the insurance company have made a mistake and asking them to rectify it. The number one statement made to me by private consultant surgeons is that fees are too low (I agree for what its worth) and that insurance company are really, really difficult to deal with. They are not.
As regards fees, however, if you want to increase your fees the first port of call is actually to check you have a) charged the right amount, to begin with and then b) making sure you ARE ACTUALLY PAID the right amount. In the example above the £75 wasn’t lost, it was paid to the medical professional concerned.
Look at it this way. His total charge was £175. If I hadn’t noticed the £75 had been deducted in error, he would have received 43% less than he was perfectly entitled to be paid!
pete@medicalhealthcaremanagement.co.uk
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Happy New Year first of all.
I’m sure this year will be an improvement on last year.
Which brings me neatly to the idea of goal setting for 2018. Some private consultants did not reach the goals they intended to do last year. Why is that?
There are numerous reasons. The main one, however, lies in the definition of the goals itself. For example, I want to see more patients. Alternatively, I want to make a lot more money.
The problem with such goals is they are not really goals at all. They are nothing but wishes.
Much better goals would be: I want to see 25% more patients or I want to make 50% more in 2018 than I did in 2017. It matters little what the goal is. What is important is having a very clear and precise goal.
This is much better for a number of reasons.
The first reason is that they are measurable. This means it is possible to compare the 2018 performance against that of the previous year. Is it better? Is it worse? In either case, the answer alone will enable the private consultant to take action. If it is better, ask yourself why? If it is worse, also ask yourself why?
The very fact you have the data available means you are in a better position to move the business forward. Further, you will be making decisions on how to progress based on information rather than “feeling”
The reality is, is that it is extremely dangerous to run a business based on guesswork. Any consultant needs data upon which to base his/her business decisions. It is alarming, however, how many do NOT have the basic information.
In the majority of cases, the data is actually right under the private consultant’s nose. It should be anyway. All MHM clients have a weekly report available to them. It details how many patients the consultant saw that week, that month and even that year. How many patients attended a new consultation? The number of new patients is crucial. If a private practice is not attracting new patients, eventually it will lose money. Sounds obvious?
But do you know how many new patients you saw in December 2017?
How many new patients did you see in December 2016?
Did you see more patients in December 2017 than you did in December 2016?
In the answer is yes, then that’s positive.
But if the answer is no, then that could indicate a problem.
Either way, the supplementary question, in either case, is: WHY??
Once you have the data and once you have decided if you are moving towards your goal or away from your goal, then the next step is easy. DO SOMETHING! Take an action that you think will move you toward your goal. Or take an action that will replicate any improvement you have made. Of equal use is realising what you are doing is not working. If by the end of January 2018 you are, despite your best efforts, seeing fewer patients than targeted, you have identified that fact very early. Early enough to think about an alternative strategy.
Set specific goals to be achieved by specific points in the year.
Monitor your actual performance against such goals at each pre-defined point in time.
Make sure you are either exceeding or meeting your goal.
Now you have a better perspective on what is really happening in your practice and also what it should be accomplishing for you.
And all because you have set goals and not just made wishes.
Happy New Year!
pete@medicalhealthcaremanagement.co.uk
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I’m a freelancer.
I provide an outsourced service for my clients.
I run my business to generate an income for me.
Notice all three of those sentences started with the word “I”?
But when I (sic) go and see a potential new client or even an existing one, I always remember it is not what I want that is important. The word ‘I” e.g. generating an income for me, is the last thing of interest to the potential client.
It is truly surprising the number of businesses and indeed individuals who forget the person to whom they are speaking is interested primarily in one thing THEMSELVES. Whilst this does not mean the entire world is full of totally selfish people, it does mean that people are much more interested in what I can do for them than what having them as a client can do for me.
All of my clients are medical professionals. Without stating the obvious, they all have their patient’s well-being at heart. But that does not mean they have my wellbeing at heart because (a) I’m not a patient (b) I need to produce results for them. If I were a patient its pretty much guaranteed they would have my interests at heart. But I’m not.
Recently I blogged about a potential supplier who didn’t return phone calls to me. During the final conversation and in a desperate attempt to secure my business he came out with the classic:
“But Pete your order really IS important to me!”
That had the opposite impact than he desired for I’m not in the slightest bit interested if it is important to him. I’m only interested in what giving my business to him can do for ME.
Think about it. You don’t walk into Starbucks for coffee because you are interested in them. You walk in because you want a coffee. By all means, Starbucks will satisfy your thirst in pleasant surroundings too but never will they think you’ve gone in just to help them sell coffee.
It is just the same as my clients being only interested in what I can do for them.
And I never forget it.
Having said all that, I recently had a bad chest infection. Being self-employed you can’t call in sick so I duly attended a pre-arranged meeting with one of my clients. He is very interested in the results I produce for him. That is why he uses me. He was pleased to see HIS business was in good hands. A good result for both of us!
Afterwards, though he started asking questions about my cough, cold, how long I’d had it etc. He then went on to give me some antibiotics.
I did think it was funny that I’d gone to see a client and ended up having a medical appointment with him.
Especially as he is a gynaecologist.
pete@medicalhealthcaremanagement.co.uk
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I was at a medical conference recently and one of the speakers – a well-established consultant surgeon – stated during his presentation that a private surgeon could not charge for inpatient care.
He may well be a safe pair of hands but on that point he was wrong.
After the conference, I had a word and said he was incorrect. It IS possible to charge for inpatient care.
I couldn’t help but suggest to him the fact there was a separate code for inpatient care indicated it could be charged. Obviously, it may well depend on the insurance company concerned. In principle though, it was possible to charge. I knew I was right because I’d actually charged for inpatient care for an MHM client a few weeks earlier. And the invoice had been paid.
But he wouldn’t budge.
He was right.
I was wrong.
Skip forward a few weeks and I received an email from my consultant surgeon friend confirming that I had been right all along and he had been wrong.
Why is it sad that I had been right?
Because my consultant surgeon friend has been in private practice for well over a decade and he’d NEVER charged for inpatient care.
More significantly though, my friend had not checked each month what could and could not be charged for. That also begged the question if the fees he was charging had been checked with the same frequency too. He hadn’t so as a favour I checked for him.
The good news is that only 3 of his fees had altered.
The bad news is that one of them had gone up £107 five months earlier yet he was charging the old and lower fee.
Thus it is important not only does a Private Consultant Surgeon need to establish what he can or can’t charge for, it is just as important to check HOW MUCH you can charge for!
pete@medicalhealthcaremanagement.co.uk
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Surgeon A is an ENT consultant surgeon. He performs an E1910 on two different patients and bills both patient’s insurance company £1,600 each.
Patient ONE’s insurance company fee structure is £1,600. Patient TWO’s insurance company fee structure is £1,945 for the same episode.
By invoicing Patient TWO’s insurance company £1,600 i.e. the fee he gets from Patient ONE’s insurance company, the surgeon has undercharged.
The surgeon will be paid £345 less than he should.
A similar issue was faced by Surgeon B. He is a gynecologist with the same issue. Surgeon B performs a Q0800 on two different patients who are insured by separate insurance companies. He invoices both insurance companies at £636 each.
Patient ONE’s insurance company’s fee structure is £636 however whereas Patient TWO’s insurance company’s fee structure is £800.
Surgeon B, by using the fee structure for Patient ONE only has undercharged and been paid £164 less than he should.
Both carry on billing not realizing that the fee depends on whom the patient is insured with and different private medical insurance companies publish different fees for the same surgical procedure.
We checked four different medical insurance companies this afternoon in order to confirm the fees for an E1910. The fee was £636, £676, £775 and £800.
We then turned to Surgeon B and the medical code of Q0800 and found the fees were, dependant on which of the four medical insurance companies we checked, £636, £676, £775 and £800 respectively.
Don’t set fees at the level published by a single insurance company.
Check which fee is paid by which insurance company for the same procedure. Do not assume they are the same because they may not be.
A surgical fee can and does alter between private medical insurance companies. It can also alter over time.
In every single case, it’s always worth checking the fee structure paid by the patient’s insurance company. Do not assume it is the same across all private medical insurance companies.
Invoice for two different codes in the same surgical episode incorrectly and it’s easy to get into even more trouble. For example Insurance Company X may allow 100% of the higher value code and 50% of the second but Insurance company Y may allow 100% of the first but only 33% of the second.
Imagine what happens if all episodes are billed at 100% and 33%.
Immediately you’ve lost 17% of your second fee!
pete@medicalhealthcaremanagement.co.uk
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In the world of medical billing and invoicing sooner or later it is realised the most efficient way of doing something is to do it once and to do it right first time. For example:
MHM recently completed a project for a private hospital. The project was to investigate why various private medical insurance companies were not paying.
One insurance company was proving to be particular troublesome. An analysis of a complete month’s invoices soon identified why. This particular insurance company required all invoices to be submitted electronically. No problem with that.
Except the data on which the invoice was raised was incomplete. For example, the patient’s date of birth or policy number or pre-authorisation was either missing or was incorrect. Each and every time this caused the invoice to fail at the point of logging electronically with the insurance company. Thus the invoice was not actually passed to the insurance company for payment. Instead it was put in a “holding” pile.
In other words the invoices were not being done “right” so to speak at all.
They were having to be done two or three times.
To resolve the problem, it was imperative to make sure ALL the details were correct so invoices could be correctly processed and not placed in a “holding” pile. It was vital all the details were 100% correct. That was, or so it appeared to be, the root cause of the issue. But why was this proving so troublesome?
It transpired medical secretaries were of the opinion the hospital receptionist were responsible for getting it right. The hospital receptionist said the medical secretaries were responsible. Then they both claimed the person who actually raised the invoice was responsible.
The reality was that nobody was making sure the data was right and this was before the correct CCSD code was being identified and used.
The spat had caused, over the previous six months, the hospital to be short of many tens of thousands of pounds. Indeed the holding pile was not only greater than the value of an average daily outpatient appointments, it was STILL growing.
Skip forward a few months. The receptionist obtains the details and checks them. The medical secretary ensures all the details are recorded on patient records accurately and checks them again. The person responsible for medical invoicing highlights on a daily basis ANY invoices which can’t be processed. The holding pile is now less than 0.5% of a MONTH’S worth of invoices.
Is this overkill?
Cash in-put into the hospital from this ONE insurance company has increased by around 160%. It’s not overkill at all.
Do it once and do it right!
pete@medicalhealthcaremanagement.co.uk
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Failure to get paid is not an accident. Something has always caused it.
There is always a reason why you aren’t getting paid. And the number one reason is that no invoice has been sent.
Take for example, the consultant surgeon I was working with recently. The issue as he saw it was that his cash flow seemed to be totally uneven and much less than he expected.
Something causes it to happen.
There is ALWAYS a reason.
If you leave invoicing until later its 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 a private medical practice and discovered an issue with invoicing frequency. So why are “tomorrow” “Friday” or “when I get 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.
Invoices should be raised DAILY!
Once a week is not helpful. In one extreme example a practice was invoicing at the end of each month. No wonder there was a problem.
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.
Wednesday September 30th 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 Tuesday October 13th – one day short of two weeks later!
Is it any wonder the consultant was extremely dis-satisfied with the practice cash flow?
BUT NOT INVOICED AT ALL?
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 his cash flow was poor.
But before we go any further do NOT blame the medical secretary. She has enough to do. The phone rings. She has to meet and greet the patients. She has numerous letters to type. She has to book clinics. She has to book theatres. That is precisely what she should be doing. 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.
A private medical practice is a business.
It must be managed as a business.
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 LATER – DO IT NOW!!
pete@medicalhealthcaremanagement.co.uk
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During a conversation with a friend of mine recently, I pointed out that our clients had some things in common.
For one thing, they are consultant surgeons.
And that means they are all supremely qualified. They are right at the top of the game. They have to be because the patient’s life is sometimes – literally – in their hands.
Knowledgeable
Then my friend made a really interesting point.
He said as a surgeon (he IS one) both he and other consultants are VERY used to asking for a second opinion from another consultant surgeon.
Yet he could not understand why when it came to running their private medical practice, there seemed to be a reluctance to go out and seek the opinion of an expert in running a private medical practice.
Maybe its because after all the years of training, our clients are so highly trained and skilled they are almost hardwired to perform in a certain way. What is curious is that other professionals i.e. non-medical professionals have a similar tendency.
They too are reluctant to ask for expert help.
And there is nothing more dangerous than someone who thinks he knows but in reality doesn’t.
What don’t they know?
Worse still when he does not realise what he knows is wrong or inappropriate.
Silly example: my partner and I were having dinner with my friend and his wife recently.
My partner (Lord knows why) enquired why ladies were required to remove nail polish or nail gel if they were having a surgical episode?
In her opinion it was unnecessary.
Because, according to my friend, the theatre staff attach monitors to the patient’s fingers to monitor her and nail gel causes problems with the connection.
He knew what he knew but my partner didn’t know what she didn’t know.
So she asked.
pete@medicalhealthcaremanagement.co.uk
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Harry Hubris was, and probably still is, the classic example of how not to run a business.
I first met Harry about 5 years ago at a conference where I was speaking after which Harry asked me if I would like to take over all his medical invoicing.
However, before we even got to the point of agreeing a date to meet, Harry scuppered any prospect of a relationship.
He insisted as part of the agreement between us he wanted MHM Ltd to deposit £10,000 into his practice bank account.
In the event of any shortfalls and/or excess a value equivalent to the deduction would be made from the £10,000.
He would then “charged” another £100 which would constitute a fine for allowing a shortfall/excess to arise.
Further still, until such time as MHM recovered the funds from the patient, it would not be returned.
When it was recovered the £100 “fine” would be returned.
I’ve been around far, far too long to immediately react to his suggestion
Indeed I’ve been around long enough to know NEVER to react.
I’ll give it some thought and a considered opinion. In other words, unless it’s a life or death decision, I don’t react.
So I said NO to Harry.
Harry was definitely not happy with this response. He immediately stated he wasn’t sure if we could work together. On this point he was right.
I wasn’t sure if we could work together either.
It wasn’t just the £10,000 that bothered me. Nor was it the concept of forcing MHH to get it right.
If you think about it, if I can’t get the episode invoiced AND paid for my client I can’t charge the client anyway. I need to get it right.
What truly bothered me was Harry’s fault philosophy.
If Harry didn’t get paid “somebody” was to blame and therefore “somebody” must be punished.
Nonetheless, I drove up to meet Harry and discuss what he was looking for.
All the alarm bells went off when during the meeting with Harry I discovered his practice had a 100% turnover in permanent staff last year.
All the med-secs there were temps and 3 different people had tried to sort his invoicing and billing out in the last 8 months.
One apparently started on a Tuesday morning and never came back from lunch.
Harry was constantly being cited as the very reason the practice was in such a mess. He was proud of this in fact and explained why.
Harry demanded 100% perfection.
As a surgeon, he is quite right. A patient’s health is at stake so a medical practitioner should seek and demand 100% perfection.
No argument from me.
But in the commercial world, 100% perfection is just not going to happen.
You aim for it consistently.
Threatening and “punishing” staff is pretty much guaranteed to make sure your aim is never achieved.
Culture
Could it be the culture Harry was used is completely different from the culture of the commercial world?
I have no idea.
I suspect it is different.
That is not to say some commercial firms don’t demand perfection; they do.
But what I do know is that constantly blaming people and threatening to “punish” them will only motivate them to walk right out the door.
That is precisely what Harry was facing.
As I wished him a good day and walked out the door too.
pete@medicalhealthcaremanagement.co.uk
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I like blues music. I like Robert Johnson for example.
And I like cash (including Johnny)
What I don’t like is the expression “cash flow”
Because cash does not flow.
Cash has to be managed.
Around this time of year I start to take calls from consultant surgeons who in view of their impending tax payments require an increase in cash collections. It’s happened every year since MHM was formed. The normal instruction is to increase the cash flow. Immediately. Simple enough. I can do that.
Existing clients don’t call because invoices have already been generated for them and they’ve already been paid for their work. Their cash has already been maximised.
The real problem faced by potential clients though was highlighted this morning when a consultant surgeon referred to needing an outstanding cash flow “purge” within his practice. This highlights to me a more fundamental underlying issue. Let me explain.
He wasn’t viewing his private medical practice as a business yet that is just what it is:
A Business.
A private consultant surgeon – just the same as any business – should know how much he is invoicing both in terms of patient numbers and the value of those patients. If he is invoicing correctly and ensuring he gets paid he can also therefore calculate his revenue receipts. If he wasn’t a consultant surgeon but sold another service or product, he should be able to perform the same calculation.
So he knows how much he is or should be invoicing. Providing he proactively manages his practice.
If you think about it, most consultant surgeons already know their overheads too. They know how much their room rental is. They know how much the staff cost. And they know how much their professional indemnity costs (too much before you ask). Of course there are other expenses but fundamentally they already know their expenditure. They know their total costs.
Therefore they know or should know how much they are spending too.
Enter stage left Mr. Micawber.
He knew a thing or two about how to run a private medical practice did Charles Dickens.
For one thing he knew cash doesn’t just flow in to it.
It has to be managed.
pete@medicalhealthcaremanagement.co.uk
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This is a topic that comes up frequently when I meet Private Consultant Surgeons.
Indeed, the point was touched upon last year in a blog regarding asking self-funding patients to pay in advance. Self-funding patients represent the major risk of non-payment for the private consultant. That said MHM does not advocate requesting full payment before a consultation. One
group of Private Consultant Surgeons who made it mandatory that ALL self-funding patients paid in full and in advance.
Within 3 months they had lost over 90% of their self-funding patients. This represented a value several times LARGER than the balance due from unpaid self-funding consultations.
Cancellations are completely different from “Did Not Attend” and frankly none of my guys (and gals) suffer from a significant number of cancellations. Yes, there is a small number but in no way is it a problem. It is more an inconvenience.
But there is another aspect to the debate. That aspect is those patients who ‘Do Not Attend” i.e. are defined as DNA
Patients who do not attend for their consultation represent a 100% loss just the same as cancellations. It matters little if the consultation is 20, 30 or 45 minutes even. If the patient does not attend the consultation then that time is lost and no revenue may be charged for it. Certainly, this is true if the patient is insured for it is extremely unlikely any insurance company will allow a fee to be charged if the patient did not attend for a consultation even if a cancellation was necessary for genuine reasons.
The issue, however, is different if the patient is self-funding.
Of course, it is possible for the consultant to send an invoice to the patient who did not attend.
That does not mean, however, the invoice will be paid.
The conclusions are therefore as follows:
if the patient is insured there is very little the consultant can do about DNA patients
if the patient is self-funding however taking a deposit (which can be deducted from the final charge) has the effect of REDUCING the number of “Did Not Attend” patients.
BUT……
Would such an approach have a negative impact on the reputation of the consultant?
I suspect it would.
It would be interesting to hear from anyone who has a different approach and the results they have obtained. Feel free to email me at:
pete@medicalhealthcaremanagement.co.uk
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This specific issue comes up frequently when MHM is asked to review the outstanding accounts of a private consultant surgeon.
There are two reasons normally why the patient believes they have already paid and more specifically the hospital has already taken payment. The first is
When the patient is registering at the hospital, he/she is frequently unaware or never even told the card details are for hospital fees only.
The patient is unaware the hospital is not responsible for collecting the consultant’s fee.
To overcome this, MHM recommends the client’s invoice bears the message “payment of this invoice is not covered by any debit / credit card details taken by the hospital” To further help prevent the issue arising, MHM recommends that when the patient makes the booking for the initial consultation, he/she is told an invoice will be sent to them after the consultation.
Over the last year, twice MHM has amended the surgeon’s invoice to include the above sentence. In both cases, the number of outstanding self-funder invoices reduced.
The second reason is that the patient had a “package” with the hospital. Obviously the package covered the patient’s stay, surgery, anaesthetist and, most likely, follow up consultations.
But the package would probably NOT have covered the initial consultation.
This happens more often than is thought!
To resolve this issue MHM contacts the patient and request they check what was and what was not covered in the package. Payment of the surgeon’s initial consultation fee soon follows as the patient agrees the initial consultation fee is not covered. BUT again when the consultant’s secretary confirms all items with the patient, the patient should have been advised the initial consultation was not covered.
Whilst there are in the real world some patients who do not pay upon receipt of an invoice, the vast majority do not pay or react to the invoice because they genuinely do not believe they owe the medical professional any money.
Because they have already paid in their view!
pete@medicalhealthcaremanagement.co.uk
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Reading Matthew Syed’s latest work reminded me of something I’m conscious of when I look at the business performance of the private medical practice.
One definition could be the ability to look at a situation and almost have a sixth sense of the cause of the problem. For example just this week I looked at a pile of rejected invoices and knew immediately why they had been rejected.
I didn’t have to ask why.
The specific insurance company they were destined for always uses numeric reference numbers ONLY.
Those rejected contained letters. But the international division of that insurance company always proceeded their reference numbers with letters.
Clever me?
Nope. Experience had taught me to spot that.
I’m told by one of my clients the technical expression for having such an almost sixth sense about something is called “expert induced amnesia”
The knowledge over time has moved from the conscious part of my brain, the explicit, to the implicit part of my brain.
And that got me thinking about how and what I look for when considering if and how a practice can improve.
The “what” is always the same. For example:
That is not the same as asking what the number is. It is “do you know how much?”
I’m not really interested in what the actual number is.
Instead, I’m interested in knowing if the business KNOWS!
If the answer is “don’t know” that tells me there is a lack of management controls which sets the direction and scope of the assignment.
However, if the answer is yes but the number is at the end of the last financial year that tells me something else.
Very occasionally I hear “yes; its £x,000 as at the end of last month”
If there is no regular and timely basic management information being produced, the likelihood of significant process errors being made increases too.
And that is precisely what I found when I took on my most recent client.
No timely, accurate management information was being produced.
This was because the process of invoice generation and cash receipt allocation was not being completed.
That immediately led to another question: why not?
Yet paradoxically, the concept of “meaningful patterns” can be said to fly in the very face of my training and subsequent application of scientific management.
I’m looking for patterns which will point me in the areas of possible improvements.
Actually, it doesn’t fly in the face of my training and application of scientific management at all. And it doesn’t really matter if it does.
What matters is that areas for improvement are discovered. And then acted upon?
What is really interesting is the reaction from a practice principal when an error is found.
To me its an opportunity to put it right and ensure the error is prevented from happening again.
Sadly, however, some reactions don’t exactly proceed that way.
Significantly though, those that follow the path of “opportunity to improve” do see an increase in their cash flow.
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I’m used to insurance companies declining to pay a consultation charge for an Orthopaedic Surgeon within 10 days of surgery.
The reality is that this does not impact only on Orthopods.
I’ve seen it happen with GI Surgeons. And I’ve seen it with ENT clients.
It’s the very reason before I invoice consultations within 10 days of treatment, I ask if the consultation was “routine”. Or if there were additional medical reasons.
But it is only the consultant surgeon who knows why the consultation took place.
If routine, a post-surgical follow-up within 10 days of the surgery, might not get paid.
If on the other hand there were medical reasons, then it is possible.
But how?
It is best to call the insurance company and advise you will be submitting the invoice.
Then provide evidence WHY the consultation was necessary.
Nine out of ten times the consultant will then get paid.
After all the insurance company is NOT the enemy.
But what does throw me completely is when it is an initial consultation that has been declined because:
“Under the patient’s policy benefit is only payable when treatment is related to an eligible in-patient or day-patient stay within six months. Outstanding treatment costs are, therefore, due from your patient.”
How can an initial consultation be refused under such conditions?
It can’t.
What I’m actually being told is that the consultation is not covered under the terms of the policy.
That is different.
I did suggest to the insurance company concerned it amended the wording. It should read: “initial consultations are not covered under your patient’s scheme”
It’s annoying when this happens. You have to speak to the insurance company concerned. The question becomes: why the consultation was declined?
Where I have the problem is asking an unnecessary question. If the insurance company had made it clear WHY the consultation was declined there is no reason to call.
In the time I’ve taken to resolve the query I could have called the patient and obtained payment for the declined consultation for one thing.
pete@medicalhealthcaremanagement.co.uk
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MHM recently completed a project for a private hospital. The project was to investigate why various private medical insurance companies were not paying.
One insurance company was proving to be particular troublesome. An analysis of a complete month’s invoices soon identified why. This particular insurance company required all invoices to be submitted electronically. No problem with that.
Except the invoices were woefully inaccurate. For example, the patient’s date of birth or policy number or pre-authorisation was incorrect. Each and every time this caused the invoice to fail at the point of logging electronically with the insurance company. Thus the invoice was not actually passed to the insurance company for payment. Instead it was put in a “holding” pile.
To resolve the problem, it was imperative to make sure ALL the details were correct so invoices could be correctly processed and not placed in a “holding” pile. It was vital all the details were 100% correct. That was, or so it appeared to be, the root cause of the issue. But why was this proving so troublesome?
It transpired medical secretaries were of the opinion the hospital receptionist were responsible for getting it right. The hospital receptionist said the medical secretaries were responsible. Then they both claimed the person who actually raised the invoice was responsible. The reality was, therefore, that nobody was making sure the data was right and this was before the correct CCSD code was being identified and used.
The spat had caused, over the previous six months, the hospital to be short of many tens of thousands of pounds. Indeed the holding pile was not only greater than the value of an average daily outpatient appointments, it was STILL growing.
Skip forward a few months. The receptionist obtains the details and checks them. The medical secretary ensures all the details are recorded on patient records accurately and checks them again. The person responsible for medical invoicing highlights on a daily basis ANY invoices which can’t be processed. The holding pile is now less than 0.5% of a MONTH’S worth of invoices.
Is this overkill?
Cash in-put into the hospital from this ONE insurance company has increased by around 160%. It’s not overkill at all.
And the hospital has realised a little pre-emptive medicine has stopped a rubbish in = rubbish out issue.
pete@medicalhealthcaremanagement.co.uk
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