Cash flow management seems to be a common struggle for many medical and dental practices. From wrongful denials on the insurance side to collection delays on your practice’s side, unlocking effective cash flow management can seem impossible.
However, with the right strategies and resources, you can improve your cash flow management, giving you more flexibility to grow. In this article, we’ll cover different approaches and solutions to help you rework the cash flow management in your practice.
Strategies to Improve Cash Flow
Cash flow management isn’t a one-size-fits-all approach. Instead, the strategies that work best for your practice will be unique to your operations. For example, the insurance providers you accept can have a huge impact on your cash flow. Here are four different strategies to consider implementing in your practice.
Prioritize Payment Collection
Revamping your payment collection function can take your cash flow management policies from surviving to thriving. When a patient comes in for an appointment, estimate the full charge and collect as much as possible at the time of service. This might look like asking for a copay before the patient leaves or a deposit at the first consultation.
Similarly, submitting insurance reimbursement claims daily can shorten the turnaround time for receiving funds. Your administrative team shouldn’t be stockpiling claims and submitting them once a week. The quicker reimbursement requests are sent, the sooner you get your payments.
Outstanding claims should also be reviewed on a daily basis. This helps your billing team correct any errors and resubmit them in a timely manner. Patient receivables should also be revisited weekly. Any outstanding amounts should be followed up on, especially when confirming patient appointments. Ask them, “How would you like to pay your outstanding balance today?”
Time Outgoing Payments
While improving your deposits, you should also rework your outgoing payments. When you receive a bill from a vendor, you have a certain timeframe to pay, such as 30 days. Remitting payments right before the due date gives you access to cash longer.
Let’s say that you receive a $5,000 bill in the mail from a supplier with 30-day payment terms. You also have to run payroll on Friday and are worried about having enough cash. In this situation, it might make sense to wait to pay the supplier bill until the deadline to ensure you have enough cash on hand to pay your employees.
Properly timing outgoing payments requires careful tracking. After all, you don’t want to miss a bill and have to pay a penalty.
Regularly Review Contract Terms
Contract negotiation is another way to implement effective cash flow management in your practice. Instead of auto-renewing contracts, like with your insurance provider or your medical supplier, take the time to evaluate the terms.
Can you lower your supply costs by asking for a repeat customer discount? How about decreasing your credit card fees by switching providers? Everything from your building and equipment leases to your outsourced provider contracts should be reviewed to find ways to save money.
Implement Creative Scheduling
Increasing your revenue can create more cash inflows during the month. Many practices see success with creative scheduling. Creative scheduling staggers start times so that you (the provider) can see multiple patients per hour. This scheduling method presumes that you are a part of each appointment, while another staff member, like a nurse or hygienist, also has a part in the appointment.
By seeing more patients each day, you are maximizing you and your staff’s time, while simultaneously increasing your cash flow. Creative scheduling might also include last-minute appointment openings and having text reminders to reduce no-shows.
Tools and Resources for Cash Flow Management
The good news is that you don’t always have to tackle cash flow management on your own. In fact, there are a variety of tools and resources that you can use to simplify the process. Let’s cover a few of these items in more detail.
Deposit Reconciliations
Deposit reconciliations are non-negotiable to track your cash flow. This process matches the daily close to the daily deposit. Not only can this procedure help reduce fraud and asset misappropriation, but it also gives you key insights into your collections during the day. Deposit reconciliations can be completed manually or with the help of software.
Outsourced Service Providers
Outsourced service providers are a great resource when negotiating contracts. They can advocate on your behalf for better reimbursement rates, lease terms, and supplier contracts.
Credit Card Management System
Improving your cash flow also means giving your patients convenient ways to pay for visits. A credit card management system can keep a patient’s card on file to quickly pay outstanding bills. Your patients no longer need to worry about outstanding bills, and your practice gets access to cash quicker. When using a credit card management system, it’s important to have a financial policy that gives you authorization to charge the patient’s card and complies with HIPAA regulations.
Summary
Can you use any of these strategies and resources to improve the cash flow management in your medical or dental practice? If you have questions about effective cash flow management for medical and dental practices, please contact us.