During these difficult economic times and with the severe impact of Covid-19 on the world economy, it is important to focus on the financial health of your practice. Strangely, the Covid-19 pandemic allowed a lot of business owners the time to think about their businesses and to focus on what really matters. Maybe most of us had a little bit more time to reflect on things that we would otherwise not have time for.
A review of the financial well-being of your practice can be a daunting matter, but here is some practical advice on what you can do:
- Make sure that your practice bills for all the services delivered to patients and that this billing is accurate in order to maximise revenue. Ensure to bill within 24 hours of the service rendered. If you leave the billing for too long before submitting the claims, you might end up in missing some of the bills and may run out of time to follow up with medical schemes before an account becomes stale.
- In the past most medical practitioners did not bill for services like telephone consultations or telephonic prescriptions. Times have changed and medical professionals need to start billing their patients for this. This can create an additional income stream and will help recover lost income due to less face to face consultations.
- More importantly, make sure that you maximise cash collections on all billing raised, especially during these times where cash is king. Make it as easy and convenient as possible for the patient to pay. Offer more than one payment method – EFT, credit card, Snap-scan, Zapper. Try to prevent the patient from the leaving the rooms without payment, especially in the case of a private patient or a patient on a hospital plan.
- Make sure that your accounts person or bureau matches remittances from the medical aids to actual payments received in your bank account. We often find that practices do not implement this critical control. Without this measure it is impossible to determine the amount of cash that is collected and also extremely difficult to manage bad debt or to follow up om outstanding accounts.
- Ensure that the outstanding accounts are followed up regularly and as soon as possible. The sooner the better. Try and follow up on outstanding accounts within 30 days from the visit or treatment. The doctor’s or hospital visit must still be fresh in the patient’s memory in order to collect the money effectively.
- Review your unrecoverable accounts. Review the age analysis on a monthly basis, just after month end. You may need to write-off old debt that is not recoverable. In some instances, there is a VAT benefit in doing this regularly. In cases where the outstanding amounts are of a higher value, do a hand over of the accounts to a reputable legal firm – always just make sure that the cost of the hand over will not be greater than the outstanding debt.
- Understand the operating cost base of your practice to ensure that expenses are contained. When last did you review comparative prices for services like internet connections, printing and stationery, rent, accounting services etc.
- Are you still getting the best service and price on your billing system and other technology in use in your practise? Make sure you remain up to date with the latest solutions that is available in the market. The cost of a billing system as well as the switching fees escalate annually. These escalations can easily result in a situation where you pay far too much in comparison to other colleagues who are new in the market.
- Make sure that you get the best professional advice to run your practice optimally. Partner with the right people that has the expertise you require to guide you through the stormy waters.
CA (SA), CIMA, M Com (Tax)
SM Squared (Pty) Ltd