Fighting Inflation at Your Healthcare Practice
Originally published on March 24, 2023
While no business is immune to inflation, healthcare practices face a unique predicament. That’s because while most businesses can increase prices to compensate for increased costs, physicians are generally locked into contracts with insurance companies. And when your contract is locked, so are the rates you charge—even as your patients worry about the bills you send them.
With the vast majority of their patients using health insurance, healthcare practices must get creative in the face of inflation. The good news: Plenty of alternatives are available to bring in more revenues or save costs. So as other businesses more freely raise prices, here’s what you can do to protect your practice’s bottom line.
When an individual has an income deficit, one of the first steps we take is to cut our spending. We see where we can save on groceries or whether we truly need that new power tool or sporting equipment. Maybe we check our streaming subscriptions and memberships to eliminate those we rarely or never use.
Your practice can do the same thing in the face of inflation. Scrutinize your business with vendors that provide and maintain software, medical supplies, office equipment, water coolers, etc. Are you getting what you pay for? Are other companies charging less? Do you need everything you’re buying from them? Take time to asses what you’re actually using, and shop around a little bit to see what’s out there.
You should also review your labor situation. Nobody wants to let employees go, especially during times of high inflation. But make sure the staff you have is working efficiently and performing essential and beneficial tasks. Evaluate your personnel costs to determine whether each person adds value to your practice.
If you’ve got a solid staff in place and working well, keep them fulfilled and happy so they stick around. The cost of replacing a departing employee averages 33% of that position’s annual salary. Save that money by boosting their engagement at the workplace so they’re less likely to go elsewhere.
Find Gaps in Your Revenue Cycle
Patient intake, coding, claims, collections… they’re all part of your practice’s revenue cycle. Inefficiencies, errors, denials, complacency, lack of personnel or other issues in those processes will negatively impact your practice’s cash flow. And that’s the last thing you want when inflation is high.
Review your operations to make sure your revenue cycle is sound. Some areas to consider:
- Are you requiring prepayment of copays and other charges before services are rendered?
- Do you get accurate information during patient check-in to make sure claims are filed properly?
- Do you have accurate billing codes?
- Are you collecting on unpaid bills?
- Can you automate some processes to increase efficiency and reduce errors?
Working with a healthcare CPA can help you pinpoint revenue cycle issues that could be costing your practice financially.
Bring in Overdue Patients
You’ve seen it a thousand times; a patient checks out after an appointment without scheduling their next visit. It’s understandable, since most people don’t plan routine responsibilities a year in advance. But that year can easily become 18 months, two years, three years or more. It’s bad enough that their health could suffer, but it also means lost revenue opportunities for your practice.
Check your records for patients who are overdue on visits. Then call them to see how they’re doing and ask if they’d like to make an appointment. Doing so does more than bring in revenue. It helps your patients stay healthy and shows you care about their well-being.
Renegotiate Rates With Insurers
Yes, it can be a time-consuming endeavor. But renegotiating your rates with insurance carriers is a powerful weapon in combatting the effects of inflation. And while the old phrase “everything’s negotiable” isn’t always the case, it’s true more often than you might think.
Assuming your rates can’t be negotiated with insurers could mean leaving revenue on the table. So if any of your contracts are approaching expiration, now is the time to discuss their terms. You can do this yourself or hire an expert to negotiate on your behalf. Regardless of which you choose, keep the following thoughts in mind.
Learn more about the plan’s current position in the market. If it’s run by a company that’s trying to gain footing in your community, they won’t want to lose you as a provider.
Ask your coders and other billing personnel if they’ve seen barriers to getting paid. For example, if a payer refuses to pay an unlisted code, you could negotiate that point in your next contract. You can also ask your billers about denials and current accounts receivable to identify what hasn’t been paid (and the process for following up to get them paid).
Know the value you hold for the insurer. If your practice has grown in number of patients or locations, that may be due to more people using the insurer’s plan. If you have extended or weekend hours, patients will more likely come see you with issues than visit an emergency room. Given that ER visits are more expensive for insurers to cover, they might appreciate your expanded availability.
Appeal to their economic humanity. Remind them that you’re maintaining quality of service, paying your staff and facing higher malpractice insurance rates in the face of historic inflation. Let them know about other measures you’re taking to cut costs while emphasizing the need for higher rates.
Bring ancillary services into the conversation. If rates simply can’t be increased (or even if they can), work on expanding coverage to include X-rays, labs, durable medical equipment and other additional costs.
Inflation isn’t easy for any business. But with a little effort and some expert help, you can get more out of your practice’s revenues to ease the burden you face.
All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.
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