"In-Office" Collection Ratio
Friday, August 12, 2016
Posted by: William Pupkis, CMPE, contributor
How important is the “in-office” collection ratio today? More so than it has been in over thirty years. Why? For several reasons.
For starters, the growth of large deductible plans across the country means that many more people must pay for services out of their pocket before their insurance coverage will pay the cost of medical care, compared to years past. Another reason is that collecting at the time of service is less costly than billing for those services after the fact. Lastly, and one of the greatest intangible benefits medical practices may have realized, is that they were able to remove collections from becoming an interference to good patient relations.
It is also important to track this “in-office” ratio on a regular basis. Why? To ensure that the policies and protocols are being followed. I have seen practices, after noting good results, experience a decline in overall success and not know it.
In most cases the data collection system now being used will give the numbers needed to do the calculations on a daily, weekly or monthly basis. There should be little, if any, additional burden on the receptionist or bookkeeper. If obtaining the numbers is somewhat burdensome, then the underlying system is suspect and should be re-evaluated.
Total those charges generated in the office and the money collected at the reception desk for those charges each day. Divide the amount collected into the total charges for any given period to obtain the in-office collection ratio. Most practice can achieve an overall in-office collection ratio of 50%.
Taken one step further, it is easy to calculate the percentage of credit extended to all patients. This also has the advantage of not penalizing the front desk with charges that must be submitted because of contractual obligations. Subtract charges payable by major carriers, i.e., Blue Shield, Medicare, etc. before doing the calculation. It is the percentage of credit because practices have every right to be paid this money at the time of service.
Establish a goal
The ratio should be shared with the people responsible for its success: the receptionist and other assistants. It should be easy enough to track or watch the daily or weekly ratios, but the overall ratio for the month is the most telling. I recommend that a percentage goal be established for each month, which is something to strive for. If the goal is exceeded those responsible should be complimented; if not, the objective proof can be used as a prod for a better effort.
In any event, only with the ratio known can a medical practice hope to stay alert to the actual performance.
Written by: William R. Pupkis, CMPE. William is an emeritus member of the American Association of Orthopaedic Executives. He serves as the chair of the AAOE Communications Council.