When we work with physicians and managers who’ve found their financial results have inexplicably declined, they often wonder why the profit numbers changed when the practice is still managed in the same careful way as before. It’s a puzzle and a disappointment and a huge source of frustration!
But therein lies the rub: As managers, our job is often to respond to changes that happen outside our business. Doing things the same way, even when executing perfectly, is often not enough to assure good results. Things are happening in the broader market that affect our patients and their behavior. It’s our job to recognize when trends that have nothing to do with medicine still require a response from our industry.
One really powerful example of a completely external trend that is nonetheless affecting every practice business is the rapid adoption of online payments by consumers. If your practice hasn’t responded to this trend, it’s probably already affecting your collections negatively.
The shift in payment behavior by consumers has been dramatic. I created the chart to the left using USPS data showing that single-piece stamped mail has declined more than 50% in the past decade. The Post Office attributes this decline to shifting consumer preferences, especially for bill payment. The days when it was normal behavior for consumers to sit down once a month and review paper statements, write stacks of checks, stuff the checks in return envelopes, then stamp the envelopes and drop them into the mail are rapidly disappearing.
Patients’ strong preference for paying electronically is both an opportunity and a threat to your practice business. Give patients an easy way to pay online — better yet, give them electronic statements, too — and you’ll get paid faster, with less labor required, and reduced paper and postage costs, all while making patients happier. Now that’s some serious upside!
But if you don’t make online payments possible, you’re also risking getting paid more slowly, with higher collection costs. That’s because it’s not just a matter of patients preferring to pay online. They’re organizing their budgets and managing their money in a completely different way. When your paper bill arrives, it could be the only one received via postal mail. Your wired, mobile patient probably won’t have a stamp on hand. Your patient may not even have checks on hand! That means the paper bill is not just an annoyance for your patient, it’s an obstacle to you getting paid. And that’s going to delay payment and add to your costs for bad debt, repeat statement mailings, and handling by your staff.
Responding to changes outside your control is not the most fun part of management. But it almost always presents an opportunity, too. Studies show consumers’ perceptions of businesses that offer online payment get a boost. So on top of paying faster, your patients will be happier with your practice if you respond to the electronic payment trend and make it easy for them to pay.