10 tips to improve cash flow in your medical practice
Cash flow constraints in your medical practice can be a one-way ticket to financial disaster. There are many reasons why cash flow challenges occur. Addressing the root cause of the problem can help you get money flowing into the business more quickly, enabling financial growth and viability. Consider these 10 tips:
1. Submit claims in a timely manner. The sooner and more frequently you submit claims, the smoother your overall cashflow. Unfortunately, some medical practices struggle with timely filing because it takes time for physicians to complete their documentation. Electronic health record (EHR) specialty templates and on-the-go mobile apps can greatly enhance efficiency.
Another challenge medical practices may encounter is not being able to hire and retain enough certified medical billing staff. In this case, it might be helpful to partner with an outsourced revenue cycle management company. With edgeMED, for example, you have access to a full suite practice management and EHR system as well as medical billing and collection services.
2. Perform real-time eligibility checks. Improving your cash flow is about getting claim submission right the first time around. Lack of coverage is one of the most common reasons why payers deny claims. Checking eligibility in real-time—and updating insurance information on the front end—helps your medical practice get paid more quickly.
3. Focus on proactive denial management, use a claims scrubber. A built-in claim scrubber detects and eliminates errors in billing codes, reducing the number of claims that are denied or rejected. Fewer denials and rejections equate to better cash flow for your practice. It’s all about preventing denials proactively.
4. Integration between your practice management and EHR systems. Complete integration allows you to transition quickly between scheduling the appointment, documenting the encounter, and submitting the claim. This efficiency means you spend less time on administrative tasks and shifting between systems and more time providing high-quality patient care that equates to more revenue.
5. Engage patients. You can’t improve cash flow if you neglect one of your most significant payers: The patient. First, send statements using each patient’s preferred method of communication (i.e., mail, email, or text message). Then make it easy for them to pay using fast and secure online bill pay. Patient engagement and empowerment are a critical part of improving cash flow in your medical practice.
6. Create a patient financial policy. Similarly, you can’t expect patients to pay unless you clearly spell out those expectations—and then enforce them at the point of service.
7. Add new services. Adding new services (e.g., care management or telehealth office visits) can greatly enhance cash flow because they present opportunities to generate more revenue.
8. Be strategic about when you pay your vendors. For example, some vendors may offer a discount for paying early. If so, take advantage of this. If not, there may be no short-term urgency to pay the bill when other expenses are more of a priority.
9. Take out a small business loan. A short-term loan or line of credit can help increase your medical practice’s cash flow. Not sure how much to borrow? Consider these questions:
What’s the purpose of the loan? Is it to hire more staff? Purchase new medical equipment? Cover unexpected expenses? Weather seasonal patient volume fluctuations? Once you know the purpose, you can start gathering information about what amount makes the most sense.
What’s the current state of your business finances? Lenders will want to see a strong history of repayment, profits, and a projected future cash flow. They’ll also want to see that you won’t get bogged down in repayments.
What is your growth potential? How will the loan help propel your business forward?
What is the loan’s full cost? In addition to the principal loan payment, you’ll also pay variable or fixed interest rates, closing or origination fees, servicing or processing fees, and potentially prepayment penalties.
10. Renegotiate contracts. This includes asking payers for more money as well as negotiating more favorable contracts with vendors. In addition to bulk inventory rates, you may be able to pursue discounts, lower prices, or better terms. If your vendor or payer isn’t on board, it might be time to shop around or drop your contract.
Conclusion
There are several ways to improve cash flow in your medical practice. Determine which of the 10 tips listed above makes the most sense and start there. Remember: One small change can potentially make a big difference. Learn how edgeMED can help and be sure to check the Healthy Snacks Blog for more expert insights, best practices and industry trends.
