21 Oct Top 4 Financial Mistakes Independent Practices Make

 

Laura Goodman, CPA, CHBC is a veteran accountant who has seen it all in the healthcare industry.  She has worked with countless independent practices over the years, so we sat down to ask her what she sees are the biggest mistakes her clients have made in the past.

Top 4 Financial Mistakes:

 

1.When a client doesn’t want to use analyses as tools to improve

The goal is for practices to improve using available data.  It is difficult when, for example, the data shows that a great percentage of A/R is due to outstanding patient balances, but the practice is in denial about this, insistent that they regularly collect patient balances.  The goal is to share opportunities that I identify with practices so that they can take this information and work with it to improve their practice.  It’s understandably painful to open up these buckets of worms, but it’s best not to be in denial about a problem as it will likely not get better on its own.

2. When working with a billing company, you need to have an exit strategy

Working with a third party to handle your revenue cycle means that this outside party will likely maintain a great deal of your financial and practice management records.  These records are not always housed on a shared system.  It’s important to consider ahead of time how you will obtain all of your records if you decide to break ties with your billing company.  To facilitate a smoother exit, spell this out at the beginning of the relationship.

3. Practices not paying refunds

It is a matter of best practice, and often law, that practices refund monies they have collected that they find were not owed.  I often see that practices drag their feet when it comes to refunding timely.  This obligation will not go away, so it is best to stay on top of refunds.  It’s much easier to handle small sums regularly versus large sums less frequently.  Good reports can assist with identifying monies due, making the process less painful.

4. Practices don’t pursue patients who owe high balances

I constantly see this with clients.  Patients continue to generate increasing balances with the practice because the practice continues to see them, even thought they refuse to pay their bill.  Practice will keep seeing these patients because they don’t want to turn someone away who needs medical attention.  I explain to my clients that doctors need to look at their business as a business.  You are providing a service and you must be reimbursed for that service in order for your business to survive.  You cannot afford to work for free.  Front desk staff need to be trained to be polite, yet firm when requesting payment of outstanding balances.

 

Laura Goodman, CPA, CHBC is a Partner at FGMK, LLC and has provided accounting, tax and financial management services to closely held healthcare and real estate businesses for more than 25 years.  Her expertise includes tax structuring and transaction planning, strategic business consulting, financial statement reviews, and complications, operation reviews and personal tax planning.  She regularly handles consulting engagements for medical practice management, practices sales and mergers and start-up medical practices.  She also analyzes cost segregations and forecasts for clients entering into new construction projects and those embarking on new business ventures. 
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