Net collections: Are you waving the white flag?
The subject of net collections seems to be in the ether these days. (For the purposes of this discussion, I'm referring to net collections as the amount your practice is ultimately reimbursed for services it provides, i.e., your net reimbursement after adjustments or credits.) Though it's long been a staple metric, its usefulness in our high-deductible environment may be in doubt. Since net collections measures how much of what you're entitled to has actually been paid, an accurate calculation of it can be invaluable. But therein lies the rub. An accurate calculation of this "simple" metric is increasingly hard to come by. Practice management systems have gotten much better at tracking multiple fee schedules and comparing them against what we've actually been paid--this isn't the problem. The problem is that more of our reimbursement must now come from patients, so it may take months for any service to be fully reimbursed. If you run a report on net collections for a recent time period, this lag in reimbursement will suppress the average net collected for all your payers. If you're running the report primarily to keep an eye on your payers, this lag is enough to make the aggregate data all but useless for that purpose. The report will almost always "show" that your payers haven't reimbursed as promised, even when the reason is simply that it takes more time to bill patients and for them to pay. An executive at one of the larger groups we've worked at confessed to me that "we don't even bother with net collections reports anymore. Entering the fee schedules is a waste of time." While I can understand the frustration, I think there's a risk of throwing the baby out with the bathwater. There's a lot of value in calculating net collections. We want to know--no, we need to know--if payers are reimbursing as agreed. And when slow patient collections drag down the net collections figures, that information is also important to understand. What if patient bad debt is starting to climb? Net collections analysis can help you spot this and take action.
