Though challenging, cash flow in the medical practice can be improved by following these simple procedures:
1. Manage accounts receivables
Fees from patients must be managed effectively to reduce the risk of a large write off at the end of the year. Bulk billing, and instant payment of patient’s portion of medical cost not to be borne by insurance or government is a good way of ensuring the flow of cash into the business. Patients can be encouraged to pay on time by offering discounts for instant or early payment. Patients who are provided with payment plans should have the plan backed by a legal document. The practice should make multiple payment options available to patients. Patients with overdue accounts should be monitored closely to reduce the risk of non-payment. If possible, all patients need to have their insurance details checked on each visit.
2. Automate business processes
The use of technology to automate process can go a long way to reduce cost and errors in processing within the practice. Prompt filing of claims to insurance companies and government is essential in reducing the amount of time that it takes to receive cash for services provided.
3. Manage bills and purchases
While you work on ensuring that patients pay on time, it is also good to make sure that your creditors also receive their cash in time. This helps maintain good relationships with creditors and protects your reputation. A good plan on when payments are to be made to creditors and for purchases of equipment are integral to ensuring a healthy cash position. Purchase decisions should be made with a good forecast of the cash inflows and existing commitment in order not to constrain the business.
4. Expense control
Operating expenses including staff costs can be a major determinant of the business cash flow. Managing these expenses ensure improvement in profitability and cash position. Controlling such expenses may involve elimination of unnecessary expenses, management of staff hours and promoting staff efficiency through performance measures.
We at Fortuna are here to help you. Whatever you business needs are, we have the capabilities to understand your business situation from the financial and legal perspectives. We can provide all the help you need in managing your cash, improving profitability and efficiency in your practice.