Most medical providers understand that there must be a percentage built into revenue predictions for each quarter that will never be collected due to default. This percentage of patients will never pay their bills even though they were treated and received medical help. The reasons for default may vary; in personal injury cases, it can often be due to loss or personal bankruptcy. Still, the result remains the same; the medical provider will not be paid for services, and may even lose money due to supplies and provided treatment costs.
The default problem increases risk and decreases your patient pool
The majority of providers will attempt to minimize default by choosing to treat patients who are less riskier than others. Thus, reducing the pool of potential patients significantly, and impairing operations due to lack of patients who can pay out of pocket and upfront for services.
In order to gain more patients, providers inevitably must take on more risk of default by treating patients who have a lesser likelihood of paying. While a certain amount of default can be compensated for, the “perfect storm” situation always looms present. The perfect storm in this situation is when multiple patients default, causing the practice to fall short of available cash and be unable to pay their expenses.
Devising ways to expand the patient base into riskier situations while still maintaining an acceptable level of default percentage is a balancing act that requires a full-time accounting and billing team dedicated to collections activities.
How to increase guaranteed payments and reduce wasted time
The ultimate answer to the default problem would be to:
- increase guaranteed payments for accounts receivables
- allow the staff to concentrate efforts on things other than collections
- reduce the exposure to the “perfect storm”
- allow new patients to be treated without having to consider their ability to pay out of pocket
PROVE is providing precisely that — guarantees of payment for services and an ability to reduce collection risks and defaults. Accepting a new patient should not require this much consideration and analysis.
Through their medical accounts receivables financing programs, PROVE purchases existing aging accounts that require time and effort to be collected. With an ongoing partnership, future accounts receivable associated with approved accounts can be paid for within days.
If PROVE purchased accounts end up in default, there is no reimbursement penalty to the provider. PROVE assumes the risks associated with collections. Thereby allowing the provider to treat patients without first considering if they fit the risk profile. The default percentage built into your books is effectively down to zero, meaning that the “perfect storm” of too little cash flow to cover your bills is never to be experienced. Your default problem is solved.