The primary goal of any medical practice is to provide exceptional patient care. But, of course, there is a critical business aspect of your practice as well. Improving and optimizing your cash flow is essential for day-to-day and long-term success. Read on to learn how medical practices can improve their cash flow and how Larsen Billing can help you at every step.
Why Cash Flow Management Matters for Medical Practices
Every practice relies on working capital to provide care. Cash flow keeps your practice running, from providing patient services to covering overhead costs and keeping the lights on. You face difficult questions about sustaining your business model without sufficient cash flow. Unfortunately, this distracts you from doing what you do best: providing excellent patient care.
Revenue and profits are essential for long-term growth, but daily, weekly, and monthly cash flow helps you maintain a sustainable business model for your practice. Knowing how to manage this properly is one of the biggest challenges that private practices face.
As a provider, you have limited capacity to manage the technical aspects of your practice: provider enrollment, coding, billing, claims, collections, and compliance. The team at Larsen Billing provides the services you need, handling your medical billing and optimizing your workflows so you can improve your cash flow starting today.
Ways Your Practice Can Improve Cash Flow
Below are six ways to intentionally and effectively increase cash flow for your medical practice.
1. Strong Revenue Cycle Management Processes
Strong revenue cycle management processes are the foundation of any successful medical practice. These cash flow strategies directly affect claims submissions, approvals, and payment. Prompt and complete claim submissions –– with appropriate CPT and ICD 10 codes –– position your practice to receive timely payment, reducing hiccups in the compensation process.
Improve your cash flow by creating processes that promote:
- Accurate and complete collection of patient demographic and insurance information
- Verification of insurance eligibility and benefits, ensuring the patient has coverage for the services they’re receiving
- Timely and thorough documentation of patient care
- Timely submission for charge entry
When submitting claims, payers require accurate and complete information for timely payment. Missing patient information will result in denied claims and delayed payment for your practice. Therefore, on-time, detailed claim submission is essential to increase your cash flow.
Partnering with a robust medical billing company like Larsen Billing ensures you’re implementing thorough revenue cycle management processes that reduce denials, optimize workflows, and result in prompt payment, all of which contribute to increased cash flow for your practice.
2. Claim Denials Management
Claim denials create gaps in compensation and halt your cash flow. Understanding why claims are denied allows you to implement practices that reduce denials and expedite payment to your practice. A robust billing and compliance company keeps claim denials to a minimum, helping you understand the causes for denial and adjust workflows to reduce friction in the claims process further.
Denials often originate from the first encounter or point of engagement with the patient. Your practice must collect complete, accurate patient information (including demographic and insurance information) before services are provided. A professional, experienced billing firm can identify workflow issues that lead to denials, creating and implementing a robust claim denials management strategy. The fewer claim denials you have, the more cash flow and working capital you have to pour back into your practice.
One of the best measures to protect against denials is to separate this function from charge entry. Most practices make the mistake of assigning charge entry and claim denials management to the same person/people. Working denied claims is often more time-consuming than charge entry, so it tends to fall by the wayside. This leads to lost revenues which usually are never recovered by the practice. Assigning a different team whose sole responsibility is managing your denials (escalating them, submitting effective appeals, pushing payers to pay claims correctly) makes all the difference in the world to your bottom line. Your Accounts Receivable will be much lower as you assign a specialized team to manage this critical process. This is one of the issues we hear about at Larsen Billing from providers who tell us they don’t have the right team focused on this process. This is also one of the things that set us apart from other billing companies: our unwavering attention to your A/R.
3. Ensure Patients Understand Financial Policies
Your cash flow relies on patients understanding and adhering to your practice’s financial policies. Every new patient packet should include a clear, complete outline of your payment policies so they know what to expect. Your fee schedule is a critical part of your packet: patients should know exactly what you charge for each service.
It’s crucial that you collect payment from patients at the time of service. This helps tremendously with cash flow management and improvement. Set expectations regarding your payment policies, and you’ll see improvement in payment collection workflows.
Engaging patients with your policies from the first interaction prevent time wasted sending patient statements or tracking patients down to notify them of their bills. In addition, informed patients will be prepared to pay their copays and out-of-pocket expenses at the time of service.
Patient engagement begins with information workflows. Create effective collection methods that make it easy for patients to pay their bills. For example, allow them to pay bills online or through a patient portal. At Larsen Billing, we have strong opinions about practice management software systems that can help with this process and systems that can make it so much harder for you and your patients. The simpler and more convenient you make payments, the faster you receive compensation and increase your cash flow.
4. Evaluate the Scope of Services
Are there opportunities for adding new revenue-generating services for your group? Expanding services benefits your patients improves your bottom line and increases your cash flow.
If you add services to your practice and you’re contracted with commercial payers, review your contracts to ensure your new services are included on your fee schedule, and you get paid. Sometimes you will need to renegotiate your contracts to include added services. Other times they’re included, and you’re simply expanding care. We counsel our clients to identify areas in which they can expand care.
5. Reviewing Commercial Payer Contracts
Regular, thorough contract review ensures you are getting paid appropriately for your services. As you look over contracts, consider whether you can renegotiate those contracts to receive higher pay. Contract renegotiation is essential for you to maintain long-term profits. However, it’s a time-consuming process that many providers don’t have the capacity for.
Larsen Billing’s contracting department specializes in negotiations, renegotiations, and credentialing to ensure you receive the highest payment possible for your services. Your contracts and payment amounts dictate your cash flow. Partnering with a firm with proven expertise in commercial payer contracts helps improve your cash flow, increasing profits and empowering you to expand your practice further. In addition, we can handle your credentialing and contracting needs even if you are not a billing client.
6. Be Strategic about Expenses
Managing your income and patient payments will help you increase cash flow, but your practice expenses also dictate effective cash flow management. Consider these critical questions about your expenses:
- What agreements or contracts do you have in place? Are all contracts in your best interest?
- How much are you paying for different services with your vendors? Are these services necessary?
- Are there areas where you can reduce expenses while maintaining quality?
- Do your vendors offer a discount for paying early?
In addition to how much you’re paying vendors and for which services, payment timing is crucial. Understand when your monthly or annual expenses will hit. Then, if possible, stagger invoices so high costs aren’t due all at once. This practice ensures you have working capital at all times.
The following practical tips will help you see how much you’re spending and areas where you can reduce expenses without sacrificing quality:
- Discuss payer contract renegotiation to determine if you can receive more payment for the services you provide
- Evaluate employee costs, including salary, benefits, and additional expenses
- Review your profit loss statement monthly to look for patterns and areas where you can reduce loss
- Analyze costs to know what you’re paying to each vendor and why
- Eliminate unnecessary expenses
As you evaluate your contracts, vendor partnerships, and business expenses, look closely for opportunities to reduce costs while maintaining quality care and a superior patient experience. Larsen Billing has experienced, qualified experts who can streamline your workflows and strengthen your operations so you see the maximum income and cash flow possible.=
Improving Cash Flow with Larsen Billing
Consistent cash flow is the lifeblood of your practice. Therefore, you want to make every effort to reduce costs while increasing your cash flow so you can provide optimal care for every patient who walks through your doors.
The team at Larsen Billing specializes in cash flow management solutions for practices like yours. Our seasoned team of coding specialists, contract negotiation experts, and billing professionals provide the expertise you need to ensure your claims are filed correctly, and you receive prompt payment. In addition, we’ll work with you to analyze your workflows and optimize your cash flow strategies starting now. So reach out today to learn how our team can serve you so you can help your patients.