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How Veterinary Practices Can Capture Missed Charges

November 2, 2020

This article originally appeared in Today’s Veterinary Business.

Missed charges are an unfortunate fact of life at veterinary practices. Even if they have the best of intentions, few hospitals can claim a 100% capture rate. Billing mistakes are guaranteed to happen from time to time. But what makes missed charges such an insidious problem is how easy it is to underestimate the scope.

Simply put, we don’t know what we don’t know. Without the proper protocols and procedures in place, getting an accurate picture of the problem is difficult. After all, if you knew a charge had been left off a bill, you’d immediately move to correct it.

That doesn’t mean we don’t have some hints about how widespread the problem is. According to the American Animal Hospital Association, 17% of lab tests were not billed, and other sources estimate that the industry misses an average of 5% to 10% of all charges. This means a hospital grossing $2 million could be missing as much as $200,000 in charges each year. That missed revenue also reduces the hospital value by $1-2 million, assuming it is valued at five to 10 times earnings.

Keep in mind, all this doesn’t affect your costs. You’re spending the same amount to operate your practice either way. You’re just giving up earned revenue.

Discovering missed charges can feel a little like finding a leak in your boat after you’ve set sail — the challenge lies in fixing the problem while charting your hospital’s course. The good news, though, is that no matter what your actual missed charges are, many of them can be captured. Those leaks can be sealed.

Here are four steps to help you identify missed charges and begin recapturing them.

1. Identify Problem Areas

You can’t fix a problem if you don’t know what it is. Therefore, the first step in capturing missed charges is to conduct an audit.

You could go about this in several ways. You could bring in a consultant to look for discrepancies in your medical charts and billing statements, or you could examine the statements yourself, although this might be a challenge given your busy schedule.

Fortunately, auditing every billing statement your practice has ever issued isn’t necessary. Instead, each week you should grab a handful of medical charts to compare against your invoices. Over the course of a month or two, you’ll identify missed charges, and you might see emerging patterns.

For instance, maybe your practice consistently forgets to charge for nail trims. And perhaps you don’t charge for follow-up lab tests as diligently as you should. No matter the service, once you see the routinely overlooked charges, you’ll be better prepared to take corrective steps.

2. Create Protocols and Templates

A good routine is your secret weapon for capturing missed charges. Seeing why is easy: If everyone in your hospital does things differently, they’re creating more opportunities for mistakes and missed charges. By standardizing and simplifying how things are done, you can reduce the chance of errors.

The best way to begin is to create more consistency by going into your billing system and developing templates for your top 20 to 30 services. You should also look for opportunities to bundle charges. For instance, if every routine checkup includes a particular set of lab tests, it’s more efficient to bundle them for billing purposes. That way, instead of trying to remember to add several items, the procedures will appear on the bill by default.

Training your employees also plays a key role here. Helping your team to understand the importance of standardizing processes, sticking to a routine, and correctly using travel sheets will help reduce the likelihood of a missed charge. And since everyone in your practice benefits when revenue is captured, your employees hopefully will be eager to help.

3. Build in Safety Nets

For our purposes, a safety net is any procedure that acts as a check against error. To that end, some of your best safety nets are other people in your practice. When a technician inputs charges based on a doctor’s recommendation, the doctor should review the charges for accuracy. Likewise, when a patient is checking out, the team member at your front desk should verify the procedures performed (on the travel sheet) against what appears on the bill.

Safety nets can be created in other ways. One of the best is good customer service when preparing estimates for pet owners. Not only does this help your clients know what to expect, it also provides you with a document to compare against the bill at the end of the visit. If something appears on the estimate but not on the bill, that’s a clear sign that you might have missed a charge. You have a great opportunity to capture it. Estimates can also be used to track pet owner declines. Tracking declines is a valuable tool when measuring price elasticity.

Technology can be your ally here. For instance, it allows everything a doctor recommends to be entered into the computer right away. This ensures that procedures and recommendations are captured and properly charged.

By creating safety nets, you further safeguard your practice against missed charges even after you shore up protocols and procedures.

4. Don’t Be Bashful

When multiple clients are months overdue for their pets’ annual checkup, the potential revenue loss is significant and adds up fast. Fortunately, the answer is simple. Before a client checks out, schedule the next appointment. Forward-booking might seem pushy if you’re not used to it, but most clients appreciate adding an appointment to their calendar. It also results in better care by increasing compliance.

Also, don’t be shy about updating your prices. Your costs increase throughout the year, so your charges need to reflect that. If you’re considering a 4% increase this year, I suggest spreading it out to 1% each quarter rather than a single larger bump. Although some practices are reluctant to make regular increases for fear of a negative client response, incremental price adjustments are far less jarring than you might think.

The most important time to be a little more assertive with clients is when you spot a missed charge. Although calling a client and admitting a mistake might feel awkward, remember that you’re not being unreasonable. Services were rendered, and those services are valuable. You’ll find that most clients will understand that mistakes happen. A client who would rather take advantage of your mistake probably isn’t a client you want long term.

When you add up the cost of missed revenue, you quickly appreciate the effect it has on your practice. The prospect of chasing down lost dollars can be daunting, especially in the context of a busy practice. The work you do every day can be difficult, emotionally draining and even chaotic. A new project, even one for the purpose of capturing lost revenue, can be tough to prioritize.

But just as missed charges add up quickly, so do the changes outlined above. You don’t have to completely reorganize your practice to start seeing a difference. As you audit your billing statements, implement better protocols and templates, add safety nets to your processes, and communicate with clients, you will make great progress in stopping the leakage of revenue.

So, start at the beginning. This week, choose a few billing statements and compare them against your medical records. Look for those missed charges. Then begin making changes simple enough for your team to follow suit. Soon enough, you’ll be capturing lost revenue and keeping more of what you’ve earned.


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