It is no secret that the average doctors office, all optometrists included, have an outstanding accounts receivable balance that is 90 days or more past due. The weird part that most doctors overlook, however, is two-fold.
#1) The total A/R balance that is 90+ days overdue is roughly 10-15% of the total amount billed to both patients and insurance. (This statistic is only for a "healthy" practice that bills correctly and enjoys a regular and reliable cash-flow.)
#2) If you look at that 90+ day overdue number carefully, you will likely discover that almost 80% of that money is PATIENT BALANCES, NOT INSURANCE MONEY DUE!
Look at that closely! These numbers indicate that insurance companies are doing their part and paying you on time for correctly coded and billed insurance claims; it is patients, however, that are falling behind in their payments! This is an industry fact that holds true among every professional medical practice and is not relegated only to optometry! In fact, I even believe that many, smaller, optometrist practices have higher percentages of patient balances outstanding due to their belief that being soft on patients who owe money or writing it off all together will retain clients. This simply is not true. In all honesty, a patient that doesn't pay his bill is most likely not coming back anyway and had no intention of keeping up their end of the bargain to begin with, but that is another topic for another post!
These numbers are astounding and when put into a real world scenario can be the difference between a very profitable practice and a not-so profitable one. Take, for example, ABC Vision Associates (clearly a made up name). ABC is a very good sized optometric facility that bills 1.5 million dollars in services and materials annually. At present, their weekly A/R is roughly $29,000.00 and their total A/R for this past month is $52,000.00, 10% of which is 90+ days outstanding. Of the $5,200.00 outstanding, $4,160.00 are patient balances that reflect co-pays, deductibles, co-insurances, lapsed policy charges etc. $4,100.00 PER MONTH IS PATIENT'S RESPONSIBILITY CHARGES FOR THIS EXAMPLE PRACTICE! IN A YEAR'S TIME THAT IS $49,920.00 IN PATIENT OVER DUE BALANCES THAT ABC MAY NEVER COLLECT UNLESS THEY HIRE THE SERVICES OF A COLLECTION AGENCY WHO WILL UN-DOUBTEDLY SKIM ANOTHER 30% OF THAT OFF THE TOP IF AND WHEN THEY COLLECT THAT BALANCE!
These numbers are critical because they show that the average optometrist's practice is loosing roughly 4% annually as a result of patient balances that are not settled; couple that with the average annual insurance write off of 20% and the picture becomes more grim. By the end of this fiscal year 2010, ABC will have lost $360,000.00 of their A/R as a result of insurance write-off's and patient balances and the numbers show that ABC's owners will accept that as reality and the cost of doing business. ABC, like most other average Optometric facilities is willing to take a 24% hit because they just don't realize that they don't have too!
There is a silver lining and it starts with sound financial planning. The first, and most important thing that an optometric facility can do is realize that insurance is and always will be your #1 source of income. The only thing that is gauranteed in this business is that no matter how much it is, insurance will always pay.
The second thing the shrewd optometrist can do is become what we call here at opticXpress, "insurance centric". This means, first and foremost, choose an office management software that guarantees you a steady cash-flow. Currently, the only piece of software that does this is opticXpress Software which REQUIRES your staff to enter the most important information into the office management system that almost, unilaterally guarantees zero or low (1.5% or less) rejection rates. Once this info is entered into the system, the software automatically bills insurance companies so your staff does not have to spend the extra time required editing and "batching" files, then uploading them to a clearinghouse or insurance company.
The third, and possibly most difficult and critical decision that you need to make as an optometrist is to allow yourself to focus on the health of your patients while an outside business management entity focuses on the health of your practice. In the case of ABC, had they hired opticXpress as their optometric billing service and utilized the opticXpress software, they would have the best and least expensive method around to collect that extra $49,000.00 per year they would otherwise have to leave on the table. OUTSOURCING YOUR OPTOMETRIC BILLING IS THE SMARTEST AND MOST INFORMED DECISION YOU CAN MAKE AS A PRACTICE OWNER BECAUSE YOU WILL BE ENTRUSTING THE FISCAL HEALTH OF YOUR PRACTICE TO AN ENTITY THAT LIVES BY THE NUMBERS AND SUCCEEDS BECAUSE THEY GET RESULTS! Simply, if they fail they loose business and that is not an option for a company that wants to grow and succeed.
So, there you have it. The results are in. This problem is only going to get worse as the days and months progress since out-of pocket health care expenses are on the rise. Get on top of your optometric billing and give opticXpress a call today!