You've all heard the expression, “There's a sucker born every minute.” Well, sometimes that sucker is me! Let me give you some examples.
A patient needed new hearing aids to be able to hear well at her upcoming 90th birthday party. Unfortunately, she did not have the resources to purchase the aids, but her family assured me they could handle the expense if I would agree to “90 days same as cash.” Of course, I didn't want to be the reason this little lady couldn't hear at what could be her final birthday celebration, so I agreed to the terms.
Another patient suffering with a severe hearing loss desperately needed hearing aids to hold onto his job. However, his credit rating was poor because his ex-wife cleaned out their savings and over-extended their credit cards before she ran off with the mailman. Although the man was down on his luck, he guaranteed me that he would pay his balance within 3 months if I would find it in my heart to help him. I did.
Well, the birthday party was months ago and the man has skipped town with my hearing aids. What portion of their balances did I collect? Zip, zilch, zero! Everyone has a story and a reason not to pay today, but the fact is it takes money to run a business. Patients will come up with every imaginable and some unimaginable reasons not to pay their balance, so you have to find a comfortable way to say, “Show me the money.”
The process of collecting money is uncomfortable for most people, but to operate a profitable business, you must have cash to pay your bills. Without it, your business won't survive. Financial analysts report that poor cash flow is the #1 killer of small businesses. So, how do you ensure positive cash flow? Here are a few tips:
KEEPING THE CASH FLOWING
* Establish a written collection policy. A written policy sets guidelines regarding the handling of payments and ensures that all patients are treated fairly and equitably. When patients balk at paying, it will be easy to say, “This is our collection policy. Unless you have made other arrangements with Dr. ___, I will need a 50% deposit today. How would you like to handle that? We accept cash, checks, and credit cards.” In many practices, collections are managed by a staff member to avoid negative experiences that could damage the doctor/patient relationship.
* Minimize “try before you buy” offers. I've seen many ads that say “free trial” or “free test drive,” but free doesn't necessarily mean that a patient can take the hearing aids home with nothing invested. It may mean that there is no charge if a patient chooses to return the aids. Free trials can take the wind out of your sales. They may be free to the patient, but certainly not to the business. Some hearing care providers actually allow patients to try several different aids with no money down. In most cases, a patient who has nothing invested won't hesitate to waste your time. Patients who really want to hear better won't mind paying up front, and those who hesitate to pay may not be serious about investing in better hearing.
* Request payment in full at the time of service. Most hearing care practices can't afford to act as a bank for their patients. If insurance doesn't pay for a service or device, make it clear to patients when they schedule an appointment that they will be required to pay for services when they are rendered and remind them of the anticipated fee when confirming their appointment. In the case of hearing aids, ask for half down when they are ordered and the remainder on delivery of the instruments. You may even consider offering a small discount if a patient pays in full with cash or check at the time the order is placed. Make paying convenient by accepting cash, checks, and credit and debit cards, and consider offering a finance program such as Care Credit. By accepting all forms of payment, you can eliminate most excuses for not paying at the time of service.
* Send statements monthly. Statements should be sent regularly to every patients who has a balance. It is a good idea to send statements when you are waiting to receive insurance monies. That keeps patients informed of what is happening with their account so they won't be surprised if they get a bill months later when their insurance pays less than expected. When planning your cash flow, bear in mind that it usually takes people longer to pay than you expect.
* When all else fails, send past due accounts to collections. Be prepared to initiate collection proceedings with patients who refuse to pay their balance within a reasonable time. Your options include hiring a collections agency or, for larger balances, filing a case in small claims court. A colleague of mine recently asked how I handle patients who refuse to pay their balance. It's simple, I replied. “I will no longer see them.” Personally, I would rather do something worthwhile like work on my marketing plan or go shoe shopping than invest any more time in someone who refuses to “show me the money.”