I do a free practice statistical analysis on all potential new clients and other doctors who are interested in my opinion of their practice statistics.  This statistics review tells me a great deal about 6-8 key practice indicators while also educating the doctor about the areas of the practice that are healthy and the areas where statistical performance can be significantly improved.  More frequently than not while doing these analyses I see doctors who have not the slightest idea what their delinquency is, even though they believe they do.

The problem is most practices – over 75% of the profession – are actively “hiding” their delinquency and the doctor often hasn’t a clue that it is happening.  On my most recent analysis for instance, the doctor’s 30+ day delinquency report showed that 12% of his open accounts were delinquent.  This doctor was producing an average $240k per month with 645 open accounts and with $1.5M in accounts receivable.  His delinquency report showed that 78 (12%) of his 645 open patient accounts were 30+ (two payments) or more past due.  While 12% patient delinquency is terribly high (the average of all Zuelke clients is 2.9%!), what this doctor did not realize was that an average of 26 accounts every month were having their delinquency erased and moved into “future due.”  In fact, the total true patient delinquency in this office (defined as the number of patients whose payment plans are two payments or more past due according to the terms of their original contracts) was well over 50% of all his open accounts.  It is no wonder his patient referral and case acceptance rates were both terribly low.  In addition, his accounts receivable, at 6.25 times his average production, were much greater than they should have been.  Also important is that this practice had almost 200 patients on payment plans that would not pay off until after, sometimes long after, treatment had been completed.  Making such a financial arrangement for a new case start where the responsible party is known to be stable and financially solid is an acceptance and appropriate risk.  The situation exists in this practice not because they were high quality “A” type patients but because so many delinquent patients had had their contract changed after it had become delinquent.

Significant study has shown that well over 60% to 75% of all of the delinquent patients whose payment plans were renegotiated and then adjusted to make the account appear current, became delinquent again, usually within 90 days of the adjustment.  Collection of that new delinquency became exponentially more difficult.  To be perfectly clear, moving delinquent money into future due simply because the patient makes a new promise to pay is almost always a mistake that perpetuates delinquency and ultimately causes far greater financial loss.

To make matters worse, the exact same thing was going on with this doctor’s insurance accounts!  The Insurance Coordinator did not work her insurance properly and knowing that the doctor never looked at or understood the particular report that shows this type of adjustment, she chose to hide the delinquency via these adjustments.  I estimated that the practice had well over $60,000 in delinquent insurance in the accounts receivable that were only delinquent because insurance had never been properly billed and/or followed up on.

Is it sometimes OK to adjust the amount due (delinquency) on a patient or an insurance account?  Of course!  It is done every month in all of our client offices.  However, such adjustments are done very selectively.  The most common acceptable reason for this adjustment is to correct a posting error.  As an example, if a patient starts treatment on June 28 and wants their payment due on the 3rd of the month and the Financial Coordinator was careless in how she posted the new contract, the patient’s first payment would roll into the due now (delinquent) column only 5 days after the start of treatment.  This is exactly why computer companies allow the adjustment I am speaking of.  In this case, the Financial Coordinator would do exactly the adjustment I have described above, and it would be appropriate and necessary that she do that.  If an insurance payment plan was entered based on how you thought the insurance company was going to pay and the EOB comes in later with a different payment plan, any money in the due now column must be moved out to make the necessary correction.  Third example, suppose a wonderful “A” patient with 8-10 payments made perfectly, whose account is not currently delinquent, calls the office and explains that she overspent taking the kids to Disneyland and is going to be late making her payment.  Zuelke trained Financial Coordinators would recognize the value of such a patient and would offer to stop the payment that is coming due and move it into future due, extending the patient contract by one month and earning you the undying loyalty from that parent.

Please understand that I am not suggesting that your Financial Coordinator stop negotiating new financial arrangements with delinquent patients.  In fact, doing exactly that is part of what a Financial Coordinator is being paid to do.  The entire delinquency control system depends on the ability of a Financial Coordinator to communicate effectively with delinquent patients/parents with the result being a recommitment to the original financial agreement by bringing the account current or by negotiating a new, mutually agreeable but temporary, financial arrangement.  In doing the latter, the patient is made to understand that although you are making a new agreement, the existing delinquency is not being removed from the account and that late charges will continue to be applied until such time as the account has been brought current.

The bottom line is that the Doctor/practice/Financial Coordinator must know your true patient and insurance delinquency and understand the damage that delinquency does to the practice’s ability to grow and its general well-being.  When it has been OK to do an adjustment to make a delinquent account appear current you have lost that ability and you will never understand why your practice may not be performing as you plan and expect.

For those reading this that look at and measure the dollars delinquent rather than the accounts delinquent, answer the following question.  Would you rather have 25 patients past due $400 each or 50 patients past due $200 each?  In both cases the dollar delinquency is $10,000.  The answer should be obvious but far too many doctors believe that the problem with delinquency is lost revenue from those missed patients so they only look at the dollar amount that is delinquent.  Far better that the doctor understand the social, clinical, and marketing problems caused by delinquent patients and start measuring delinquent people (accounts) and not delinquent dollars!

Zuelke & Associates has a new consultation, exclusively for non clients and past clients who are not on our active support program, which is focused solely on patient and insurance delinquency control.  Call or email us for additional information regarding this consultation.