If you think dealing with health insurance claims as a patient is a headache, just imagine if your business relied on insurers to pay those claims — a total of 3,500 a month.
Now imagine that the rest of your revenue came from co-pays and deductibles, and you routinely sent a third of your monthly patient bills to collection agencies for 60 cents on the dollar.
Welcome to Rick Danzey’s cash flow challenge.
As practice manager of the Guardian Medical Group, Danzey oversees a three-physician general practice in Victorville, Calif., that employs 35 people in two offices and an X-ray and urgent-care center. Established 10 years ago by Drs. Wendell E. Wettstein and Z. Richard Sawan, the practice grossed $2.2 million last year providing treatment to 9,000 managed-care clients and walk-in patients.
Guardian serves the fast-growing Victor Valley, a desert community 85 miles northeast of Los Angeles known for its affordable housing. Danzey foresees the need to open a third medical office and second urgent-care center within two years. To do that, he knows he must improve the collection of overdue accounts.
“Having so much money tied up in accounts receivable precludes us from being able to expand,” Danzey says.
A Flight Plan
Danzey, 55, joined Guardian last May after working four years at San Bernardino County Medical Center. He began as head of marketing and public relations and then took over business operations such as human resources, benefits, payroll, and facilities.
The former Air Force fighter pilot feels an urgent need to improve billing and receivables, which breaks down into primary insurance, secondary insurance, and patient payments.
“We have a very good handle on the insurance payments,” Danzey says. “It’s not as clean as I want it to be yet, but we’ve made great strides in getting insurance payments properly posted and down to manageable levels. It’s the patient payments I don’t have under control yet.
“We bill the patient’s insurance on behalf of the patient; it’s a courtesy that’s often taken as a right,” Danzey explains. When patients finally receive their bill, they often “forget they were seen or what they were seen for, and say, ‘I don’t owe that.’ And then they just ignore the billing.”
The practice’s “patient-aging report,” which tracks the age of outstanding bills, recently showed that 38 percent were 31 to 60 days old, 27 percent were 61 to 90 days, and 30 percent were 90 days or more. Only 12 percent of patients — one in eight — pay within 30 days.
To bring in more cash, Danzey has encouraged the reception staff to aggressively seek co-payments when patients check in. With co-pays as high as $50 a visit, they can add up quickly.
Still, even collecting this cash isn’t as easy as it seems. “We can ask for the co-pay upfront, but if someone says, ‘I can’t pay my co-pay today, can you bill me?’ we’re obligated by the medical plans to bill them. That makes for a lot of bills for little amounts.”
As for methods of co-payment, Danzey imposed a $20 minimum for paying by personal check. “Surprisingly, we get more bounced checks for $5 than for any other amount.”
Danzey is now on the hunt for other smart collection strategies. If he can improve the cash flow picture, Guardian Medical will be poised to take full advantage of the region’s rising popularity.