How Payment Plans Can Help Physicians Collect More Of Their Unpaid Receivables


Even in good economic times collecting from patients is difficult. Typically a large percentage of a physician’s receivables never get paid. The ongoing balancing act of growing a practice and maintaining strong patient relations while getting paid for services is not as easy as it may appear. When patients are unable to pay, it puts physicians in a difficult situation. On one hand, they do not want to lose patients if there is a chance that they will be able to collect payment. Alternatively, it doesn’t make sense to sit on receivables in the hopes that one day a patient will be able to pay the balance.

What are the options? On one hand, they can send unpaid receivables to collections and choose to never accept that patient again. Under this scenario, the doctor will most likely end up collecting a very small percentage of the outstanding balance, not to mention the amount paid to the collection agency. In addition, it is unlikely the physician will want to provide services to that patient again unless full payment is received at the time of service.

A second option is to require full payment by patients at the time of service. This solution affects all patients, including the long term patients that have been paying their bills on time. This is extremely limiting and is not really feasible since it will greatly hinder the physician’s ability to both gain new patients and retain existing patients.

A third option is to establish payment plans where patients who are unable to pay their entire balance can work with the physician to set up a monthly payment plan. Affordable monthly payment plans, as a means to pay off balances that patients would otherwise not be able to pay, have been shown to dramatically increase the amount collected by physicians. In addition, the physician is more likely to keep patients while enhancing their practice reputation.

Despite the significant increase in the success of collections, there has been some reluctance to setting up payment plans. One is a reluctance to “finance” the services provided. I agree that this is not an ideal situation and would certainly not offer this option to those who can immediately pay for services. However, one cannot lose site of the overall goals — collect as much of the receivables owed while maintaining strong patient relationships. Payment plans have been proven to be an excellent solution since, at the end of the day, significantly more money is collected than other alternatives. One other reluctance to setting up payment plans is the administrative costs. Even with a manual process, the additional money collected far outweighs the administrative costs. In addition, if the process of creating and managing payment plans is automated using an application such as Payment Plan Manager™, then the administrative costs become minimal.

As physicians continue to struggle with collecting accounts receivable, creating payment plans and automating the process can be an effective alternative and will provide a significant boost in maximizing cash collections.