Practice Pointers: When patients can't pay

Some doctors consider payment plans-which permit cash-strapped patients to pay off their balances over time-little more than a sham. "They're bogus," says Alexander P. Sudarshan, an ophthalmologist in Brownsville, TX. "Once you give treatment, you can't repossess it."

True enough. Providing medical care isn't like selling a new car. But not all doctors agree with Sudarshan's point of view. In fact, many who responded to our informal survey say they routinely offer a payment plan to selected patients, because these patients either don't have the cash on hand or they don't have sufficient credit on their credit cards. Included in this group are insured patients who nevertheless face high out-of-pocket costs-a trend likely to increase as consumers shoulder more and more of the healthcare burden.

"Our community has been very hard hit economically," says Roseanne J. Hooks, an FP in Nichols, SC, who offers no-interest "credit arrangements" to more than a few of her patients. "Unemployment is past 17 percent. Many patients who had insurance no longer do, and many of those can't afford COBRA."

"If you're tough on patients, you may end up collecting 100 percent of what you produce," she says. "But let's look at how your productivity compares to another practice that's willing to work with sincere people. While you're collecting 100 percent of $100,000, the other practice may be collecting 98 percent of $175,000. So who's smarter?"

The key, Bee says, is to structure a payment plan that minimizes the number of deadbeat patients and "keeps good patients in the practice."

To find out how to do that, we talked to Bee and other consultants-as well as to doctors who've successfully offered payment plans to select patients. They told us that payment plans work best in relatively mature practices that have a mixed-payer base and good cash flow.

For this reason, think twice about extending too much credit if you're new to practice and have limited cash flow or if the services you're providing on credit involve big cash outlays. But if you run an established practice, have a mix of Medicare and privately insured patients, aren't incurring large cash outlays, and have a reasonably consistent flow of money coming in each month, the number of people in your practice on budget plans shouldn't matter. What does matter is how well you go about designing and implementing these plans:

Who qualifies for the plan? For most practices, this comes down to a judgment call. You can, of course, ask for financial documents, although most doctors we spoke to say this makes them uncomfortable. Whichever way you decide who's qualified, be careful not to discriminate against any "class" of patient, as defined by gender, race, ethnicity, and the like. "If you do, you may violate federal law," notes Bob Burleigh, a healthcare consultant in West Chester, PA, and past president of the Healthcare Billing & Management Association.

Who sets up the plan? Typically, this depends on the size of the practice. In smaller practices, it may be the office manager or even the physician herself; in larger ones, the billing supervisor or patient account representative may take on the responsibility. Some doctors elect to have their billing service relieve them of the task. No matter who does it, be sure it's someone who can listen to patients and determine their level of need, has the sophistication and tact to negotiate fairly, is keen enough to recognize a bad risk, and has your complete trust.