Turning Your Revenue Cycle CASH CRUNCH to CASH FLOW

How to Get More Money Into Your Practice Faster …  And Plug the Hidden Leaks That Are Draining Your Profits

Cash Crunch to Cash Flow by Patrick Phillips is a book based on iMAX Medical Billing’s proprietary medical billing, electronic medical records, patient payment options, and profit recovery collection services.

Let’s get one thing straight before we go any further.  Your medical practice is a business.  You may have set out with the intentions to practice medicine and not given much thought about running a business, but the two are intertwined.  Your ability to practice medicine and provide quality care to your patients is only as good as your business’ ability to generate cash flow and manage expenses.  So, we will refer to your practice as a business when discussing general business tips and suggestions since all businesses would benefit from these tips and suggestions.

Outsource as many routine tasks as possible, especially when it costs less than doing it yourself, or delegating the work to your staff.

How to Get Your Claims Paid in as Few as 7 Days

Slow payments and rejections are chronic problems…  Filing claims had become a huge bottleneck in the practice.  The in-house staff were constantly overwhelmed with filing claims.  Rejections were high.  Payments were slow.  Last week Doctor found a drawer of rejected claims that the office staff had stashed away, not knowing what to do with them.  –Sound familiar?  Filing claims can be expensive.  Not getting paid is more costly.

Is your practice having the same challenge?  Medical billing is a primary cause of cash flow problems in many, if not most, practices.  There are universal problems that doctors face when billing third parties for patient visits, treatments, or medical products and services.  None of this should be news to you, but it’s a real wake up call when you see how the medical claims process can cause a major cash crunch in your practice.  This should motivate you to make sure you are using the best system for your practice.

 

Fixable Problems That Can Plug Leaks Related to the Filing of Claims

Rejections have held steady at about 30% industry-wide.  The smallest error can trigger a rejection.  Every item must be perfect to be processed by the payer, whether it’s Medicare or other insurers.  A California practice had an error rate of 71% in a single year.  This caused an estimated loss to the practice of $185,000.

Common causes of rejection include…

  • Billing for a procedure not covered.  Verify coverage with a phone call before the patient arrives for an appointment
  • Inaccurate coding.  You and your in-house staff must stay on top of code updates
  • Under coding.  You and your staff must be educated as to the proper codes.
  • Human error.  A second set of eyes should review the claim prior to sending.
  • Slow payments – 30, 60, 90, 120 days or longer.  Delays can be caused by…
  • Overwhelmed staff, slow submissions.  The quicker you can get an accurate claim submitted, the faster you’ll receive payment.  You should know how long it takes for a claim to be filed.
  •  Sluggish submissions by an outsourced medical biller.  If you are using a medical biller, it’s important to know how quickly the claims are being handled.  If you’re not asking for reports, you may not know when a given claim was submitted.
  • Ineffective rejected claims management.  Inexperienced staff may not know how to resolve a particular problem with a claim.  If it involves one or more phone calls to the insurer to resolve a legitimate claim, the value of that claim drops in proportion to the amount of time (money) it takes to get paid.
  •  Abandoned claims.  It isn’t at all uncommon for staff to finally give up and stuff these in a file in the bottom drawer.  In some practices, this is called the “Porsche file” because so much money is tied up in the claims.

 

Why uncollected claims should be on your radar…

Unresolved claims have a direct and immediate impact on cash flow.  This is lost money that costs you more than you may realize… First, you provided the service.  Second, you paid to have the claim filed.  Third, you paid to sort out the problem that prevented payment.  Finally, you’ve had to cover expenses with money from sources other than the payments you were expecting from these claims.  You may have even paid to borrow money.

Uncollected claims may reflect poorly on the employees.  If you scrutinize rejected claims enough you may find the source of the problem wasn’t actually an uncooperative insurance company or lack of help at Medicare.  If employees know that they were sloppy in the first place, they may want to bury the problem.  Strict reporting systems can make it harder to cover internal procedural errors that are costing you money.

Any unpaid claims that are essentially uncollectible are skewing your actual financial picture.  When a sizable chunk of your money is either uncollected or uncollectable, any cash flow projections you make that include accounts receivable are flawed.

Unpaid bills aren’t reflected in the books distorting your actual financial position.  This can happen when staff get behind or they don’t understand the importance of accurate accounts payable lists.  You can’t project cash flow if you don’t know what’s been paid and what’s outstanding.

Employees may not think it matters that much.  If the attitude you project is that uncollected claims are annoying, but unavoidable, the employees will assume the same posture.  Instead, assume an attitude of relentless pursuit of what is owed to the practice.

Medical software.  Software has built-in limitations.

  • Medical billing software is not cheap.  But the initial price is not the only concern.  Upgrades are costly and can run up to several thousands of dollars, depending on the company and practice.
  • Changes in CPT and ICD-9 (soon ICD-10) Codes and the Health Insurance Portability and Accountability Act (HIPAA) may be in effect before an upgrade is offered by your software company…  and even longer if you delay in buying and installing your upgrade.  This opens the door for rejected claims due to miscoding and problems due to non-compliance with HIPAA regulations.
  • If you outsource your medical billing, you may not know what software is being used.  You also may not know if they’re upgrading in a timely way… or at all.  Outsourcing is an economical choice, but only if your billing service is up to date and compliant.
  •  Software can have unexpected technical issues.  Typically, when a glitch occurs tech support is available.  The question is not if tech support is available, it’s how long will it take to resolve any problems?  By the time the problem is fixed, there may be a backlog of claims to file, which in turn delays payment.

 

What Are Your Options?

Software vs Web-based, real-time claims filing.  Many doctors assume that working with software is, by definition, “electronic billing.” For our purposes, “software” means a billing program that resides on a computer in a doctor’s office or at a medical billing service.

True electronic billing is completing and submitting claims online, not just preparing the claim by computer using software installed on the hard drive and uploading in batches to a clearinghouse.

The software/submit process has three main points that often sabotage timely payments.

  1. Checking for accuracy manually.  The burden of inputting correct numbers ultimately rests with the human operator.
  2. Batches are checked by the payer for problems.  As mentioned earlier, the smallest discrepancy of information can cause a batch to be kicked back.  That means the employee may have to start the day tracking down and fixing errors in a batch of claims.  Plus, since the batch was rejected the other claims in that batch are not getting processed until the discrepancy is found… costing you money.
  3. Resubmission requires re-verification.  Any further problems are returned to the sender for correction.

In contrast, a Web-based solution eliminates these and other problems for you automatically.  When evaluating a Web-based, electronic claims filing system for outsourced service, make sure it meets the current state-of-the-art criteria:

  • Claims are completed online.  It’s a seamless process to generate a claim and submit it.
  • Automatic real-time checking.  If there’s a coding discrepancy or some other questionable entry, the system automatically flags the potential problem and won’t allow the person to proceed until the issue is resolved.
  • Code and HIPAA updates are made as they occur.  The correct information is available the next time the online system is accessed.
  • There are no upgrade charges – ever – when codes or HIPAA changes are made.  This can save hundreds or thousands of dollars a year, depending on the size of the practice.  Changes are made as they are issued at no additional charge.  (If you outsource to a medical biller using the system, they won’t have any extra expense for upgrades, which helps keep costs down for you.)
  • The most compelling reason to utilize state-of-the-art electronic claims filing is because… The system can reduce claims rejections from the industry average of approximately 30% down to 2%.

Claims are typically paid in as few as 7 days, with an average of 14 days from submission to payment.

If there were no other advantage to using Web-based, real-time filing, getting 98% of your claims through the first time and receiving payments within days instead of months are reasons enough.  That will have a major positive impact on your cash flow.

The New England Journal of Medicine reported that the administrative costs and related expenses are 26.9% of the physician’s gross income.  This equals about 1.5 employees per doctors at an average salary of $51,564 per employee, not including benefits such as vacation.

Medical billers using an online system can be extremely efficient and pass the savings along to you.  Pricing depends, of course, on the complexity of the claims.  The medical billing service typically doesn’t get paid for a claim until it’s paid, so outsourcing does not contribute to a cash crunch.

One question that many doctors ask is, “How can I be sure that this service will reduce my claims filing cost?”

As with all services you outsource, you’ll want to be able to have an apples to apples comparison of what you’re paying now and what you’ll save with Web-based claims filing service.  At the very least, you want to make sure you won’t be paying more.

Whatever outsourced services you consider should be able to produce a side-by-side comparison to show you how they can save you money.

From a cash-smart standpoint, we believe outsourcing is more cost-effective than hiring employees to do the work.  Even so, some doctors simply want to have the control of claims in their own offices.  If you choose this option for your Web-based solution, make sure you can get technical support and training for your staff.

It’s also prudent to make sure experienced coding specialists are available to your staff as some cases may required seldom-used or unfamiliar codes that must be clarified.

Savings and convenience make a strong argument for outsourcing the entire operation.  And here’s another…

Web-based filing is more secure.  Some doctors, maybe you, believe confidential patient information is safe if all the information is stored on computers in the office.  On the face of it, that makes sense.  But in reality, you are no less vulnerable to theft than any other business.  You may have files meticulously backed up, but if a computer is stolen, that information is at risk.  Perhaps you use a computer-based medical billing service.  The security of your data depends on your vendor’s ability to keep the computer safe.

WARNING: Software installed on a local computer containing all your patient data, at either a medical billing service or your own office, is vulnerable to hardware “crashes” and theft.  This also exposes you to non-compliance with HIPAA rules and regulations, for which you can be fined.  An average HIPAA fine is $10,000/occurrence.

With the top Web-based claims filing systems, a bundle of concerns are handled… All claims are completed on a secure, encrypted site.  No files are kept on your local hard drive.

Routine, secure backup.  All the information is on a password-protected area secured for your patient and claims data only.  Multiple backup sites across North America make the system disaster-proof.  Hard copies are available if you need them.

Security meets or exceeds the hacker-proof standards used by financial institutions, Internet banking, credit card companies, online stock trading companies, and government agencies.

HIPAA compliant.  Password-protected access.  Access information from any computer online.  The data is encrypted, so you and your staff can have access 24/7.  You can see exactly what is going on with a particular claim.  And your billing service is more accountable because you know precisely when a claim was filed.  There are no blind spots.  The system is transparent.

A number of reports let you stay on top of outstanding claims.  When you firmly understand the cash flow impact of your claims, you’ll appreciate having a choice of financial reports such as day sheets, patient or insurance aging reports, and financial summaries.

Posting payments is easy and fast.  This keeps you up to date on money flowing into the practice.

Simply put, if your practice is growing (or you want it to grow), it’s not likely that claims filing will get any easier using less-efficient systems.

If your current system isn’t getting claims filed as quickly as possible, or you wait longer than 30 days to get paid for most of your claims, you have a chronic cash flow problem.  It won’t go away until you switch to a Web-based, real-time electronic billing.

 

Patient Billing

“It’s Not Money in the Bank Until the Money’s in the Bank”

Doctors collect only 49% of what patients owe them.  If a friend told you she was going to open a store, knowing ahead of time that she’d collect less than half of the money customers spent in her shop, what would you tell her?  Right.  You can’t make it if you let your customers give themselves a 51% discount on their purchases.

That is no less true for you as a doctor.  But you do have options.  You don’t have to sacrifice good business practice for the sake of patients.

We’re about to show you a better way… One that will keep your cash flowing… even if you have to allow monthly payments.  But first, let’s look at why the problem of patient payments is so entrenched in the medical industry.

A portion of almost every practice’s income is directly tied to payments by patients… and their ability to pay.  As a doctor, you already know the reasons that contribute to hefty accounts receivables from your patients:

  • Co-payments of 15 – 25% depending on the insurance plan.
  • Services that aren’t covered by insurance.
  • Uninsured patients who must pay their own medical bills.  According to CoverTheUninsured.org more than 47 million Americans are uninsured.
  • Underinsured patients may have limited coverage to conserve on insurance premiums.

Doctors commonly just accept that they have to bear the burden of extending credit.  However, to move from cash crunch to cash flow, you must be willing to retool your system to prevent inevitable cash flow problems caused by slow and no-pay patients.  Slow or no payment often starts with poor payment policies or the casual attitude of the practice toward collecting money.  Late payments or no payments create Critical Cash Gaps.

Patient payments may be delayed or uncollectible if…

  • Patients are unaware of how much they will have to pay.  As mentioned before, this can be covered in the pre-visit conversation.
  • Charges that should be covered by insurance roll over to the patient in error.  By policy, most doctors hold the patients responsible for any changes that aren’t covered by insurance.  However, when claims are rejected, some offices aren’t careful to confirm the real source of the problem, which can be fixed.  The practice then burdens the patient with fees they can’t afford, and you never get paid.  For example, one obstetrical practice discovered claims were being rejected because new babies had not been properly enrolled in the insurance program by the parents.  By waiting until the newborn was enrolled to submit claims, the doctors were paid.
  • There’s no clear patient payment policy.  A sign on the wall that “payment is due at the time of service” is a wake-up call or a reminder.  But that’s not the same as a written policy, complete with the options you offer.
  • You’re too willing to be the “bank” for patients.  Some practices don’t press for full payment of the patient’s amount due and offer to bill for the rest automatically.  Many don’t charge interest, even when they carry balances for extended periods of time.
  • You become a low-cost HMO by default.  Putting patients on minimum monthly payments and not adjusting the amounts for subsequent visits – which results in higher balances owed – is great for your patients, but disastrous for your cash flow.
  • You allow 60-90 days to elapse on a bill that remains unpaid – or is only partially paid – before suggesting a structured payment plan.  Furniture or appliance stores may sell with a “90 days like cash” offer, but their profit margins often allow for such financing.  Yours don’t.
  • You’re passive about collections.  You and your staff are shy about reminding Mrs. Smith she’s overdue.  In an effort to not offend, or be seen as anything but the hero, you may be making it easy for patients to shuffle your invoice to the bottom of the pile and pay other creditors making a “louder noise.”
  • It costs you more to collect than the balance that’s due.  According to one study, costs per paper invoice are now up more than $34 with all the factors considered (labor, materials, postage).  Although the study focused on larger companies, even smaller companies pay more than they imagine:
    • Labor accounts for 90% of the cost
    • Follow-up labor to collect on invoices
    • Printing costs, forms and envelopes
    • Postage
    • Equipment costs
    • The cost of outstanding money
  • E-bills aren’t a real option for your practice.  While e-bills are becoming common for a variety of businesses, they’re not particularly useful for practices that serve patients who aren’t Internet savvy or have no access to the Internet.

Okay.  So billing patients is a mess, no matter how you look at it.  But of greater concern is, why won’t they pay?  Is it simply lack of funds?  Or is something else going on?

There are several things that contribute to slow or no payments.  And yes, not having enough money is one of them.  Some families are truly on the edge, including two-income families who would be considered financially stable, or even affluent.  The foreclosure of large numbers of McMansions in cities across the country is a visible signal that the appearance of affluence may be based on overextended credit and risky financial practices.

It’s also a matter of priorities.  Human nature being what it is, especially in America, people have short attention spans.  And our priorities shift with the seasons.  For example, if you’re billing families just prior to the opening of school, their valuable cash may be going to clothes and school supplies.  Through the holidays and after, with December bills arriving in the new year, your bill can settle to the bottom of the pile.

Not paying you doesn’t mean they aren’t able to get other things they really want – from basics like power and phone service to discretionary expenses such as cable, a new car or a vacation.

If you don’t get paid, there’s nothing to take back.  You can’t repossess a service… Of course, if you’re working with patients who are over their heads with heavy debts because of an extended illness, you’ll handle those on case-by-case basis.  What we’re talking about here are your mainstream patients.

 

Stop the Critical Cash Gaps with Friendly, But Firm, Policies.

First, make it very clear you expect full payment… Your first line of defense is to make it clear that you’re serious about having payments made in full when services are delivered.

Have your payment policy on the clipboard or iPad, ready for signature, along with the other forms new patients complete.  Send out your new policy to existing patients and remind them when they come to the office.

Think about it.  Your ability to deliver quality care is based on being able to be paid appropriately – and on time – for your services.

Cash.  Some practices have to scramble to accept cash if they commonly receive payments by check or credit card.  Keep plenty of change on hand and institute a cash check-out system.

Checks.  Be sure you use all the precautions available to prevent bad checks.

Debit cards.  More than half of Americans are using their debit cards instead of checks when making purchases.

Credit cards.  Used almost universally, credit cards shift the risk from your practice to the credit card company.  In your written policy, specify the cards you accept so there’s no confusion and there are no awkward moments (and no lost payments) when a patient presents a card you don’t accept.

Offer other options only when the patient can’t pay in full…

Well-to-do patients may assume their business is valuable to you and that you’re eager to have them as patients.  They make large purchases at clothing stores or other retailers and expect to be billed.

And while you want to have a patient-friendly environment in your practice, allowing – or even encouraging – this type of behavior is a quick step closer or a Critical Cash Gap.

In contrast, those with financial challenges may have a sense that you’re required to extend credit terms.  This simply isn’t true.  However, based on your current demographic profile, it may be obvious that you must have a back up plan readily available for a segment of your patients.

Here are the most common solutions for patients that can’t pay in full…

  • Automatic credit card payments.  This options allows you to bill credit cards monthly in manageable amounts you ad the patient negotiate.
  • Pros:  You get paid without having to send out any bills or reminders.
  • Cons:  This can become an administrative  nightmare that can result in payments never being billed if there is no automatic system in place.
  • Third-party lenders specializing in medical loans.  You’ve probably been approached to offer – or are currently offerings – these types of loans.
  •  Pros:  You can transfer the full risk of the bill to a financial institution and get your money.
  •  Cons:  Like other loans, a patient has to be credit-worthy to qualify.  In some cases, the loans require home ownership and are essentially home equity loans.  That means some people can’t qualify and other don’t want to risk their home.
  • Pre-authorized payments.  This plan allows patients to make payments using automatic monthly withdrawals from their bank accounts.  This eliminates your monthly invoicing and collection problems.  This third option is the simplest way to quickly resolve your patient payment problem.

 

Why Pre-Authorized Payments are Good for Your Practice

You can offer affordable monthly payments with the confidence that you don’t have to wait on patients to write out a check and send it in.

You’ll know exactly how much money will be deposited into your account at the first of every month.  That shrinks the Critical Cash Gap because you will have an inflow of money before you see any patients… Predictable income can stabilize your practice.

Your patients don’t have to seek out funding from loans or max out their credit cards.

The expenses of mailing invoices are eliminated.

Your staff will reclaim time spent trying to collect on past due accounts.

 

Here’s How Pre-Authorized Payment Work

You will determine the monthly payment that the patient can afford and compute the length of time to pay the balance.

The patient signs a legally binding agreement that allows you to withdraw the agreed amount from their bank account on the first of each month by a pre-authorized withdrawal.

The payments are drawn automatically from the patient’s account until the balance is paid.

This system will ensure that virtually all your patient payments arrive on time.  If a withdrawal is rejected, it’s easy to resubmit.  A quick call to the patient can assure you the money is in the bank before resubmitting.

You can handle pre-authorized payments in-house.  Staff will have to set up a system to keep track of which payments are due and when the balances are paid.  However there’s a better way… Outsourcing patient billing is more economical and efficient.

There’s typically no cost to you.  The outsourced supplier adds a small service charge to the patient’s payments to cover the processing.  This charge is a small percentage of the monthly payment.

Patients are usually receptive to this alternative payment, because they can avoid high credit card interest charges.

Checks by phone is ideal for a single payment.  The complementary service to pre-authorized payments is checks by phone.  This is the solution to use if a patient has agreed to pay a balance “when I get my paycheck on the 15th.”

 

Reclaim the Money You’re About to Write Off and Put the Cash in the Bank

When you write off money people owe you, you’ve been robbed, you’ve been charitable… or you have a poor system of collecting bills.

Traditional collection agencies can damage relationships with patients.  When a patient gets the first letter from a collection agency, you often get a call.  They are upset and feel threatened.  A few will pay the bill, but most will have their medical record sent to another doctor.

Write-offs are a major drain on medical practices.  How many uncollected patient bills do you estimate are sitting in a folder or drawer, getting older by the day?  Just like unpaid, rejected claims, these can add up to a significant percentage of the income rightfully owed to the practice.

Write-offs are a headache.  Doctors already write off legitimate charges because of other contractual agreements with insurance companies or the limitations set by Medicare or Medicaid.  Unpaid patient bills drain income you’ve earned, as well.

If you are able to collect anything over 77% of your expected collections, you are above industry average.  If you can get it to anything in the 80s, you will see a significant boost in your income.


Pull Money Out of Patient Bills That are Heading for Write-Offs

The last line of defense to protect your cash flow and your profitability is to get money from those bills you’ve all but written off.

There are two primary ways that doctors usually deal with slow and old, unpaid bills…

  • The office staff makes calls or sends letters to patients reminding them of past due balances.  If you’re using this system, how’s that working out.
  •  You hire a collection agency and hand over the bad debts to see what they can do.  Commissions rates generally range between 15 and 35 percent, but can run even higher for medical collections – up to 50% or more.  These higher fees are based on actual collections on a “no collections, no fee” basis.  Another option we are seeing is called ‘soft” or “pre-collection”.  This idea consists of a series of letters sent earlier in the cycle of the bill to prompt quick payment.  We’ve found these flat rates for letter packages run about $20 for a series of 4 letters.  But if the bill remains unpaid, it’s not their problem.  You’re paying for mailings, not results.

What should you look for in results from traditional collection agencies?

You can search the Internet and for unsubstantiated collection rates of up to 70% or even more.  If you get unrealistically high statistics when interviewing collection agencies, don’t let it slide.  Ask questions.

The average rate of collections is 14%.  The age of the bill is the factor.  Accounts are harder to collect the longer they’re on your books.  Collectability drops at an average rate of 10% a month.

The patient has already received the services from the doctor, so the bill may have become a low priority.  It certainly doesn’t have the urgency of a utility bill or the mortgage payment.

 

There’s an Innovative Solution that has Produced 41% Recovery for as Little as 5% of Collected Funds.

The QuickCollect solution combines the benefits of personable, early intervention with the involvement of an attorney as a last resort.

The major reason for the success of the Profit Recovery system is that…

  • The letters are written on the letterhead of your practice.  The patients never get the sense that you are handing them off.  They are more responsive because they are dealing directly with you.  Although they appear to be from your office, Dean Resource Group prints and mails the proven letters for you.  The tone of the letters reflect a professional practice, not a third-party collection agency.
  • The series of letters is courteous, but each one is increasingly urgent.
  • You will be assigned an attorney to handle your account.  He or she will take over when a patient is unresponsive and only after your letters have outlined the possible consequences of non-payment.  Often the weight of a letter from a lawyer is sufficient to move a patient to pay.  At no time in the process will a patient experience a rude or unprofessional contact.
  • At your discretion, you can request to have the delinquent debtor reported to one or more of the three key credit reporting bureaus – Equifax, Experian, and TransUnion.
  • You can have a “thank you” letter sent to the patient when the bill is paid.

 

The Profit Recovery system always gives you control…

  • You can access a secure site for real-time status of your accounts.
  • You get a detailed “Account Inventory Report” which logs all activity during the month.
  • All payments are sent directly to your office, not a third party, such as a collection agency.

Costs are offset completely or partially by the patient from the service fees added to the overdue bills.

Better yet, your staff is relieved of a time-consuming, frustrating, and difficult task they aren’t necessarily trained by profession to do.

Given the other options available, this is the recommendation.  It’s a cash flow friendly, low or no-cost outsourced solution that gets better results, even on some bills that you assumed would be write-offs.
 

Cutting Expenses to Improve Cash Flow

If your practice has Critical Cash Gaps, the first place to look is at patient encounters.  Are they up or down?  But some practices that have adequate patient encounters may have major leaks elsewhere.

Here are some key areas that should reveal money you can reclaim…

  • Review all expense categories.  Make sure all purchases are authorized in advance and documented.  If you find any outside charges that should have been passed through to a patient, review your billing process and close that hole.  This sounds like a tedious job, but it can yield “found” money.  Don’t beat yourself up when you see how much has been wasted.  Just fix it.
  • Look at the payroll.  Outsource when you can.  Employees are expensive; that’s all there is to it.  If you have a staff, we don’t have to explain.  Outsourcing can give you freedom you don’t have when you hire.  First, outsourced suppliers know they have to serve you well – cheerfully, economically and efficiently – or you’ll find someone else.  Without red tape.  Second, you can add outside help when you need it and cut back when you don’t.  Third, the paperwork is reduced because there are no forms to complete or payments to send to the state or federal government.  You pay the outsourced vendor who handles his or her own government forms.
  • Audit your office supply usage.  How much paper are you using?  How much ink and toner?  Does everyone have free access to pens, staplers, binders and other general office supplies that are just too available and appealing?  Many practices have been accused of counting paperclips, and you don’t want to create an environment that says you don’t trust your staff.  However, making supplies available with no accountability at all is careless.  An unlocked supply closet may imply “help yourself.”
  • Look for better, more economical suppliers.  Review all routine expenditures and see if there’s a better deal.  When shopping online, look for free delivery and rebates from office suppliers.
  • Negotiate everything.  If you want something, ask.  Forget the fact that you’re a small business.  If you’re a good customer, it’s likely they’ll comply with your request.
  • Evaluate your office equipment.  Sometimes hanging on to an old piece of equipment that still does the job is smart.  Other times, it’s a money drain.
  • Buy ahead.  If the vendor has a gigantic sale on consumable products you use every day, consider stocking up to enjoy savings now and later, even if it requires some cash outlaw.
  • Review travel expenses.  If you have employees, you need a clear travel policy outlining what you will and won’t cover.
  • Find out what procrastination is costing you.  Seriously.  You don’t want to pay for things too early, but when you’re late, you pay in extra charges, even penalties.  It makes sense to wait until the last minute to pay on time, but not if getting there late costs you money.
  • Review your insurance.  It’s just smart business to make sure your insurance matches your current needs.  If you’ve trimmed down, you may need less and can save.  Use an insurance broker who shops for insurance without getting paid commissions.
  • Review your telecommunications and Internet costs.  There are competitive deals that can save you money.  With the convergence of services and highly competitive rates, it’s likely you can find something better than what was available last year.  While you’re at it, create or update your policy about personal phone calls.
  • Lease or purchase?  From a cash flow standpoint, leasing can free up money every month if purchasing is significantly more costly.  You can lease almost anything, from vehicles to your computers and workstations.  And leased property has certain cash flow advantages, notably a predictable monthly outlay of cash.
  • Cut your taxes.  Your CPA is a small business specialist, correct?  There are tax advantages available to business owners they often don’t know about or that require documentation.  Small business owners are notoriously averse to more paperwork.  But what if it could save you thousands of dollars?  There are many deductions you may be missing.  Sit down with your CPA and explore which ones apply to your practice.  Take the one’s you’re entitled to.  You don’t get bonus points from the IRS for ignoring a legitimate deduction.
  • Keep good records.  Yes, record keeping is a cost saving-measure.  If you have a dispute with a patient, you don’t want to spend a lot of time looking for the documentation to prove your position.
  • Consider relocating.  Small towns across the United States are looking for businesses to relocate in their areas to boost the economy.  If a business can generate jobs – often surprisingly few – it can qualify for any number of breaks and perks proportionate to its job-creation ability.  Rural areas are putting very nice bait on the hook to lure businesses that can stabilize and expend their economies.  Contact the Office of Economic Development in the towns or counties to find out about the specific programs available.
  • Improve productivity.  A Gallup poll reports that employees use office equipment 1.25 hours a day for non-business activities.  That would include Web surfing and e-mail.  The annual loss per employee at that rate would be $8,759.  The vast majority of employees – 85.6% – use office e-mail for personal correspondence.  Plus, employees misuse the Internet at work surfing porn sites (70%), online stock trading (92%), watching sports (30%) and shopping (24%).  One solution is to have a secure intranet so employees on one or more offices can communicate.  In addition, lack of direct Internet access can stop any unauthorized transfer of confidential information or documents out of the office by e-mail.  You can also get monitoring software.  In general, businesses are allowed to monitor employee communications (except, for example, personal calls).
  • Prevent employee theft.  American businesses lose an estimated $30-$100 billion per year through employee theft.  The U.S. Chamber of Commerce estimated that more than 30% of business failures can be traced to employee theft.

Can you spot some places in your practice that may be leaking cash endlessly?  It may seem like a chore to review expenses in detail, but some owners see such good results that they become conservation artists, hunting down ways to save.

Note that some practices reward money-saving ideas that are implemented with cash rewards or other incentives.  There’s nothing like recognition and tangible reward to get staff engaged in generating ideas.

To echo a phrase we have used through out this article: Outsource as many routine tasks as possible, especially when it costs less than doing it yourself, or delegating the work to your staff.

Beyond the obvious relief of generating a steady cash flow, you’ll be able to funnel the energy you now lose to stress, juggling bills and unproductive time into doing what you do best…  Patient Care.