It’s no surprise that getting claims paid is one of the biggest revenue cycle challenges for healthcare providers. According to a poll from the Medical Group Management Association (MGMA), providers often struggle with timely patient payments, impacting their cash flow and practice revenue.
On average, healthcare providers send 3.3 billing statements before receiving payment, and medical practices can only expect to collect 50–70% of the balance after a patient visit. The likelihood of collecting decreases as medical bills age in accounts receivable. During the first 90 days, healthcare practices have a 90% chance of collecting outstanding patient balances. After 90 days, this drops to 50%, and by 180 days, the chance falls to 20%. If outstanding balances remain unpaid for over a year, the chance of collection approaches 0%.
What can be done?
To prevent medical bills from going to collections, it’s crucial to secure patient payments as early as possible—preferably upfront or at the time of service. One effective strategy is to use a cost estimation tool to provide patients with accurate pricing before treatment, which helps ensure patient responsibility is clear from the start.
Implementing payment policies that require copays, coinsurance, and high-deductible payments at check-in or time of service can significantly improve collection rates. Offering flexible payment options, such as credit card payments, online payments, and payment plans, can also encourage timely payments and reduce the need for follow-ups.
Healthcare practices can benefit from adopting practice management software and revenue cycle management (RCM) solutions to streamline their payment process. These tools can automate payment collection, reducing the workload on office staff and improving overall collection rates. Features like patient portals and automated reminders (e.g., text message or phone calls) encourage patients to make payments promptly, enhancing the overall patient experience.
Additionally, using EHR systems that integrate with payment systems can help ensure accurate patient information and support efficient billing processes. Automation not only reduces administrative burdens but also helps maintain financial responsibility and keeps your practice's profitability intact.
Clear communication with patients about their financial responsibility is critical for ensuring timely payments. Practices should provide patients with transparent pricing information and a breakdown of their expected medical bills during the check-in process. Additionally, patient portals that allow patients to view and pay their bills online can reduce the burden on your office staff and improve patient satisfaction.
By offering multiple payment options and clear instructions on how to settle outstanding balances, healthcare providers can improve collection rates and ensure that patients are aware of their financial responsibility well before their medical bills become overdue.
Securing patient payments at the right time is critical to maintaining the financial health of any healthcare practice. Providers who collect payments upfront or at the time of service can reduce their accounts receivable and minimize the risk of bad debt. By focusing on early payment collection and offering flexible payment methods, healthcare providers can improve cash flow, ensure smoother operations, and reduce the number of outstanding balances.
At Rivet, we offer healthcare providers the tools they need to manage their revenue cycle more effectively. Our solutions help streamline payment collection, improve pricing transparency, and ensure timely payments from patients.
Rivet’s financial and revenue cycle operations platform has helped healthcare providers across the country effectively manage the financial demands of today’s challenging healthcare landscape - from handling compliant estimates, accelerating upfront payments, delivering price transparency, managing payer performance, and everything in between.
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1. When should patient payments be collected in a healthcare setting?
Patient payments should ideally be collected upfront or at the time of service to avoid delays in receiving reimbursement and minimize the risk of accounts receivable going to collections.
2. How can healthcare providers improve the patient payment process?
Healthcare providers can improve the payment process by using practice management software that offers automation, implementing payment plans, and offering multiple payment options such as credit card or online payments.
3. Why is upfront payment collection important?
Collecting payments upfront helps ensure that providers are paid promptly, improving cash flow and reducing the number of outstanding balances in accounts receivable.
4. What role does technology play in patient payment collection?
Technology such as EHR systems, RCM software, and patient portals can automate payment collection, remind patients to make timely payments, and streamline the overall billing process.
5. How does collecting patient payments early benefit healthcare providers?
Early payment collection helps healthcare providers maintain their financial health, reduce the likelihood of denials, and avoid medical bills going to collections, ultimately boosting practice revenue.
