Growing a Healthy Practice: Top 10 Ways to Increase Cash Flow and Reduce Past Due Accounts

1. Growing a Healthy Practice:Top 10 Ways to Increase Cash Flow and Reduce Past Due Accounts Presented by: Tracy L. Spears National Consultant – Medical/Healthcare Industry Transworld Systems Inc. provider of GreenFlagSM Profit Recovery Services An MGMA AdminiServe Partner November 18, 2008

2. Tracy Spears Ms. Tracy Spears is a National Consultant for the Medical/Healthcare Industry and Director of Association Business Development for Transworld Systems. She has been consulting with Transworld for nearly 20 years, focusing on health care and medical practices. Ms. Spears presented to the Oklahoma State MGMA Meeting in October 2007 as well as held an MGMA member web cast in April of 2008. She recently presented “10 Ways to Maximize Effective Collections” at the National MGMA Annual Conference in San Diego, CA. and was instrumental in developing an A/R software interface for medical practices to increase cash flow and reduce workload.

3. Objectives of Presentation • Develop internal strategies for effectively collecting money • Help staff learn what to say to patients in order to motivate them to pay • Understand what options are available when accounts are overdue • Know when and how to use those options

4. Collection Challenges Facing Today’s Practices • Slow paying patients • Slow paying insurance carriers • Understaffed • Trying to work all accounts systematically, including small balances • Familiarity with collection laws

5. 4 Reasons to Collect • Accounts depreciate and get harder to collect • Complaints increase with time • Further medical treatments stop because patient avoids doctor • Stressful for the staff and the patient

6. Facts about Collections • Most medical practices wait until an account is 180 days past due before they give it to an agency for collection

7. Day 30 Day 60 Day 90 Day 120 Day 150 Statement Statement Statement Statement Statement Letter #1 Letter #2 Letter #3 Phone Calls Phone Calls Phone Calls *According to the Dartnell Institute, the average cost of working an account internally over a six month is $31.60 per account. Day 180 Intensive Telephone Contact and/or Legal Action at a cost of 25-50% of recovered amounts. - Typical In-House Collection Efforts

8. Facts about Collections • It costs a practice $31.60 to collect an account after it’s 60 days past due* • 90% of the collections budget is spent to collect 10% of past due accounts • Delinquent accounts depreciate ½% percent per day** * MGMA resource center **U.S. Department of Commerce study of depreciation of accounts held in-house.

9. Start Early – Recover More

11. Facts about Collections • There are over 6,000 collection agencies operating the United States

12. Facts about Collections • The Fair Debt Collection Practices Act (FDCPA), the primary federal law regulating third party collection agencies, which was enacted in 1977 with the support of ACA, is designed to help protect consumers from unfair and abusive collection practices

13. Facts about Collections • Average cost for a traditional agency is 30% • According to the ACA International 2008 figures, the average recovery rate for collection agencies is 13.8% • The true cost of collections is the amount of money that is not recovered * ACA International 2008 Survey

14. Smith’s Practice $50,000 22% recovery rate Collect $11,000 Agency gets $4,510 Practice gets $6,490 Jones’s Practice $50,000 10.8 % recovery rate Collect $5,400 Agency gets $1,350 Practice gets $4,050 Facts about Collections Additional Net Income: $2,440

15. Facts about Collections • Most money collected by a third party is from the first letter sent to the patient! • Working an account internally via phone, has a 10% chance that the call will get through to the patient • 90% of malpractice suits are with patients who owe money (hold harmless agreement)

16. Top 10 Ways to Increase Cash Flow and Reduce Past Due Accounts

17. Have a Defined Credit and Collection Policy • Policy gives staff a detailed document that they can stand behind

18. What should be included in your policy? • Initial office visit or upon admission - What Payment is required • Allowable forms of payment: cash, check, money order, and charge card • Broken appointment charge and policy • Patient is responsible for total charge. We do not look to a third party for payment • Medicare - Medicaid, what policy. Established patients only?

19. What should be included in your policy? • Office policy on insurance assignment. Full fee due now or just estimated deductible? • Whether or not service fee is charged for filling out more than one insurance form and, if so how much? If doctor "participates", how are those programs handled differently?

20. What should be included in your policy? • Maximum number of payments allowed? • Promissory notes or Truth in Lending forms? • Interest, billing or service charge - rate and when applied

21. 2. Make Monthly Statements Effective • Send statements promptly and regularly • Do not put aging date at the bottom of the statement

22. Statement With Aging Dates

23. Make Monthly Statements Effective • Do put a due date on the statement

24. 8/1/2008 Statement With Due Date

25. 3. Admit & Correct Your Mistakes • If patient has not paid because there is a billing error, admit it and correct it quickly

26. 4. Contact Overdue Accounts More Frequently • Contact late paying patients every 10-14 days

27. 5. Use “Address Service Requested” • Put address service requested on all correspondence sent to patients

28. 6. Use Your Aging Sheet, Not Your Feelings • Stand by your policy

29. 7. Make Sure Your Staff is Well Trained • Even experienced staff members can get jaded when dealing with past due accounts

30. Qualified Staff

31. Qualified Staff

32. How to Talk to Patients: Asking for Payment What you should not say: • “How much can you pay?” • “When can you pay?” • “Can you pay something?”

33. How to Talk to Patients: Asking for Payment What you should say: • “How much are you short?” • “Will you be in today or tomorrow?” • “Will you be paying by cash, check or credit card?”

34. How to Talk to Patients:Asking for Payment • Empathize with patient’s situation • Remind them of their obligation to pay • Get commitment for payment

35. How to Talk to Patients: Asking for Payment • Convert outstanding balance to a time frame • Arrange for bi-monthly payment arrangements

36. 8. Know the Warning Signs of Troubled Accounts • Account is 45-60 days past due • Phone has been disconnected or changed to “unlisted” • Partial payments are smaller and sent with less regularity • Patient says he or she won’t pay

37. 9. Know Your Collection Options • Status quo • Write the account off • Attorney • Small Claims Court • Use a third party

38. What Are Your Third-Party Options? Collection Agency • Percentage collections agency • Flat fee collections agency

39. What to Look for in a Third-Party • Proper Accreditation/Licensed • Reputable • Experienced • Easy to do business with • Partners with key professional associations

40. Disadvantages to using a Third-Party • High cost • Alienating the patient • Losing control of account • Already invested a lot of work to win the account over

41. Advantages to using a Third-Party • A third party gets the patient’s attention and makes an immediate impact • Implications for patient’s credit record • Removes doctor from position of “bad guy”

42. 10. Remember: Have realistic expectations of your accounts receivable program.

43. Useful Resource Links: • The Association of Credit and Collection Professionals (American Collectors Association) http://www.acainternational.org/default.aspx • The Fair Debt Collection Practices Act http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm • National Better Business Bureau http://bbb.org • US Chamber of Commerce http://www.uschamber.com/default • MGMA resource center http://mgma.com/resources/

44. “GLI”: GreenFlag/LeonardoMD Interface LeonardoMD & Transworld Systems share a common objective to deliver greater value to medical practices seeking a more efficient collection process. Our collaboration has produced an interface that minimizes internal efforts and reduces billing expenses for our mutual customers. The “GLI” is a seamless interface that eases the process of identifying and submitting delinquent accounts for outside collection activity. It also allows the user to stop outside collection activity when payment is received…all from within the LeonardoMD client portal.

45. “GLI”: GreenFlag/LeonardoMD Interface How does it work? • The practice determines outside collections parameters based on amount, age, and type of delinquent balances they want the interface to identify for possible outside collection activity. • The “GLI” then generates a dialog box of identified Delinquent Patient Balances and/or Insurance Claims. The client reviews these accounts and determines which accounts to submit or exclude from outside collection activity. • When Payments are Posted in the LeononardMD Client Portal they are automatically reported to GreenFlag to stop or suspend collection activity.

46. “GLI” Setup Screen

47. Automatic Submission

48. “GLI” Webpage Dialog Identify to submit = 3 mouse clicks

49. Thank you. Transworld Systems Inc. provider of GreenFlagSM Profit Recovery Services An MGMA AdminiServe Partner November 18, 2008

50. Contact: Roy J. Gustafson 281-480-1977 ext. 6 roy.gustafson@transworldsystems.com or web.transworldsystems.com/leonardomd Profit Recovery Consultant – Medical/Healthcare Industry Transworld Systems Inc. provider of GreenFlagSM Profit Recovery Services An MGMA AdminiServe Partner Questions?