Money Matters Investment & Finance Bad debts - a hole in your pocket
Bad debts - a hole in your pocket
Saturday, 01 July 2006
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dollarsign_TN.jpgService on credit is an expectation of our plastic-driven society. But each unpaid debt is a financial drain on your practice. Medical Forum examines some ways that bad debt can be managed.

The health profession is particular susceptible to accumulating debt. Voluminous amounts of red tape march hand in hand with the immediacy of health risks to create situations where a practice will extend credit to a patient who does not have the means of assuring payment at the time of consultation.

The key to maintaining a financially healthy situation is to establish clear guidelines and stick to them. Recovering debts is an awkward and often costly process that is best avoided at all costs.

  • Make your patients aware. Establish their financial responsibilities at first contact - if payment is required on the day, establish this before booking any appointments. Should you judge it necessary to defer payment, explain the patient's payment responsibilities before they leave the premises.
  • Payment not forthcoming? Follow up without delay. 14 days is an accepted time period to declare a debt overdue. Reprint and resend invoices, making sure that you mark them clearly and distinctively so they are not overlooked. A follow up call is often courteous and may alert you to outside circumstances that have caused the debt to falter - such as the patient moving house. Alternatively, the issue may simply be that no money is available to pay the debt. Request payment via instalments - a delayed recovery of debt is better surety than a lump sum that may never materialise.
  • Implement a clear strategy for pursuing those clients who do not respond to reminders. Set a time period by which you declare a bad debt - 90 days is considered reasonable. Decide which size of debt you are willing to pursue, balancing against the cost to your practice resources. If you wish to take the matter to a debt collector, be aware they will consume a large proportion of any monies retrieved and require your time and attention.
  • Establish procedure for dealing with bad debtors. Note any occurrences on their file, and consider whether to refuse consultations until a debt is paid. There are often compelling reasons for non-payment of debt, but once you make an exception, you are setting a precedent that can quietly and swiftly eat into your income and resources.

An egalitarian perception of healthcare as a right in our society can often make patients a little lax when considering debts owed to medical institutions - as a business owner who wishes to continue providing quality care, you need to make sure that you clearly and consistently make their responsibilities clear to them.