Managing cash flow is one of the most crucial parts of running your practice. Poor cash flow can cost your business more money in the long run, leading to missed growth opportunities and operational setbacks.
5 Tactics to Boost Your Medical Practice’s Cash Flow
1. Review Billing
The first thing you want to do is check that your billings are being submitted timely and accurately. Late submittals can cause your practice to lose revenue if they are not submitted within the allowed period. Review denials and check the accuracy of the billing codes being used. If billing is done in-house, make sure there are processes in place to ensure denials are being reviewed and resubmitted in a timely manner. Check that the reimbursements are in line with your contracted rates.
2. Patient Scheduling
If your practice provides annual or preventative care, you can have your staff reach out to patients who have not been seen in a while or are due for their annual checkups. Schedulers should also inquire about any changes to patients’ insurance. Checking for eligibility and updating patients’ information will save both your business and the patients’ time.
3. Timing of Revenue
Review your practice’s revenue trends. Historically, December and January tend to be the high collection months due to services provided once deductibles are met. Other factors might also be involved, such as screening campaigns or the start of a new school year when physicals are needed. In any case, just like there are peaks, there may also be valleys. Setting money aside during those high collection months will make you better equipped to handle those slow collection periods.
4. Efficient Purchasing
Do your vendors offer early payment discounts? Are you utilizing those early payment discounts? Don’t have the funds in your account to take advantage of those early payment discounts? Why not pay those bills on a credit card? By paying the bills on the credit card, you will be able to take advantage of the payment discount as well as get an additional 30 days to make the payments. Make sure you are taking advantage when items are on sale. Part of efficient purchasing is reviewing your purchases for overspending. Are there subscriptions that you are no longer utilizing, or user licenses you can reduce? Are you overstocking inventory? Reviewing your purchases could also let you know if there are any misuses of inventory/supplies. Taking a close look at the amount spent on repairs can let you know if it’s time to replace equipment.
5. Effective Borrowing
As mentioned above, you can leverage your cash flow with effective borrowing. Establishing a line of credit or borrowing through a credit card will allow you some flexibility with your spending. Before opening any accounts, make sure you do your research into the cost of borrowing, including whether there are any annual fees, what the interest rate is, whether there are any rewards programs, etc. Some of those fees may outweigh the benefits, so make sure you do your due diligence.
Takeaways
While managing cash flow can be challenging, implementing these strategies will empower you to overcome financial hurdles and build a stronger, more resilient business. By staying proactive and consistently monitoring your financial health, you can ensure your practice not only survives but thrives in the long term.
Author: Ana Costa | [email protected]
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