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How Should You Handle Patient Statements? [Simple 3 Color System]

A common question we often get when meeting with clients and potential clients is “How should I handle patient statements and balances owed by patients?”

Like most things in life, the best way to handle patient balances and statements is to be proactive.

By that I mean, creating a system that ensures that you never have to deal with them in the first place.

Train your front desk team to always collect any co-pays for coinsurance and all deductibles up front at the time that service is rendered. That way you can bypass the whole issue of patient statements altogether.

However, I’ve been in this business long enough to realize that there is no perfect world and even the tightest run practice is going to have some patients with a balance. So, we need a way to handle these balances by using patient statements effectively.

Developing a Simple System to Handle Patient Statements

The first thing we need to do is to establish when to send out the initial statement for any balances owed by a patient.

The best practice we’ve seen is to send out that initial statement as soon as there is a patient balance.

That is when you want to set up an account for that patient and get that first statement out in the mail.

This establishes an initial tracking date.

This forms the basis of our simple 3 color system to keep your statements organized.

If the patient is responding and making payments on their account, we simply continue to send out an updated statement every 30 days.

Send out the first statement and all statements for accounts in good standing on white paper.

What If A Patient’s Account Falls Behind?

If a patient has not made any attempt at a payment based on that first statement, the next step is to send out a second statement 30 days later.

What we do for our clients and what you can do if you’re printing out your own statements, is switch the paper color.

That second statement goes out on yellow paper.

Yellow is a subtle signal of caution in most people’s minds and let’s them know that something is not right.

This gets their attention and often that is all that is needed to trigger action on their part.

You can also add some friendly wording that says that the account is past due.

So, we’ve sent out that first statement on white paper, a second delinquent one 30 days later on yellow.

What Do You Do If They Still Don’t Pay 60 Days Later?

After you’ve given them another 30 days after sending out your yellow statement, you send out a “Final Demand Notice.”

Send this out on a light red or pink paper. This notice really starts to put some pressure on them.

Your goal is to create some urgency in their mind. They see the red and the wording “Final Demand Notice.” Hopefully this gets them to send in their payment or contact you to make arrangements.

If there is no patient contact or payment after a few weeks of sending out this statement, it gets a bit trickier.

Many of our clients ask that we send out a collection letter at that point on their behalf. They want it on our letterhead because it elevates the situation. It sends the message that this is serious; my physical therapist has turned this over to a third party.

So, what we do is send out a letter on our letterhead that says we’ve audited their account and found it to be past due. We stress that services were delivered in good faith and yet they are still refusing to pay.

This is our attempt to collect this money before turning it over to a final collection agency.

What About Collection Agencies?

Often the threat of turning a debt over to a collection agency is enough to motivate an individual.

Most people are familiar with the disruption and embarrassment that can cause. Those annoying phone calls at work and at all hours.

Again, they know they owe you the money. This is not your fault to try to collect this money.

Ultimately it is up to you as the practice owner to decide just how much you want to turn up the heat on a patient.

When we get to this point with one of our clients, we tell them that it is worth trying to have your staff contact them directly. Many times, your office has a relationship with a patient established and something can be worked out.

Many clients get so bombarded with mail from insurance companies and other providers that they are not sure what they really owe.

A few simple phone calls can successfully solve a lot of these misunderstandings without resorting to collections.

This simple system has worked wonders for me when I was running my own practice, and we use a version of it with our clients.

It can increase your cash flow significantly and reduce those patient balances to a minimum.

The main thing to take away from this article is the importance of having a consistent, systematic, organized way of handling statements and patient accounts.

If this is something your practice struggles with and you need some more advice and help, remember we are a simple call or click away.

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