I often ask practices if they know “how much future revenue their current A/R will cost”. After receiving puzzled looks, I explain what I’m asking is how much it cost to bill each patient and how many bills are required to recover what is owed?

It is easy to determine what is owed; the difficult part is calculating the total resource expenditure associated with final collection. Many only consider the hard cost of a stamp which ignores 96.5% of the total. A proper analysis takes into account what I call the Five P’s. They include all resources dedicated to a specific task which keep resources from another task--Personnel (training, salary, SUTA taxes, benefits, etc.), Paper, Printing, Postage, & Partitioned utilities.

Owners are often shocked when they are informed the actual cost of generating a single statement is between $7 and $11 1 2. Suddenly they begin looking at their billing process differently. Many, to the realization that they spend more than what some balances are worth, while others set payment terms ultimately costing the business 30-40%.

There are legitimate reasons for billing and typically it is because patient responsibility is often unclear at time of service. This is why healthcare incurs some of the highest levels of billing overhead. This is also why it is so important to be aware of simple yet effective alternatives which can actually reduce costs.

Most automated solutions accelerate payment by sending multiple statements more frequently, with no additional effort, and at a lower relative cost than what you already spend. In many cases this works in conjunction with your current billing or practice management software. Others include a system of statements alternating with phone calls which are connected directly with a member of your staff. More advanced solutions include bonus contacts which offer third-party impact without charging a percentage. Either way, the result is you net more for the services you provide while maintaining full control. For a more detailed demo of these and others solutions feel free to contact me directly.

1. Dental Economics – Will that be cash or credit card? Volume 87 issue 7
2. The Wall Street Journal Smart Money—Under the knife: Cutting Medical Bills, April 2008