How medical practices can handle cash securely
■ Collecting money and managing it well are vital to sustaining financial viability.
Cash is no longer king because of the rise of other payment modalities, but physician practices still need to manage it well, especially in the first few months of the year when deductibles reset.
More money comes in from patients at this time, and a significant proportion will be in the form of cash rather than a credit or debit card swipe.
“We have gotten so far from handling cash that some practices are just not used to it anymore,” said Jim Devitt, a medical practice consultant based in Merritt Island, Fla. “But practices are getting squeezed, and every single dollar is important.”
Handling cash well takes more than having a lockbox full of singles and fives under the reception desk. Not keeping good track of it can lead to embezzlement by a staffer.
Cash can have a significant impact on a practice's bottom line. The average health insurance co-pay was $23 in 2012, according to the Kaiser Family Foundation, and consultants say they can get as high as $50. The average deductible was $691 for an HMO plan and $733 for PPOs, the foundation said. Patients in a high-deductible health plan had an average deductible of $2,086.
Because of the inherent problems of cash, some practices have decided to forgo it completely. But practice management consultants say most medical offices will do better to accept it and take steps to keep the greenbacks in line with other forms of payment.
“Cash can walk, and sometimes it flies,” said Jeffrey B. Milburn, a principal with MGMA Health Care Consulting Group. “You want to take cash, because you will always have a few patients who don't want to pay any other way.”
The first step, consultants say, is to keep cash drawers intended to receive payments from patients and give them change separate from the petty cash, which is only for minor purchases by the practice. Combining the two funds can create an accounting nightmare. Practice managers periodically should review the types of expenses that are being taken out of petty cash to ensure they are appropriate.
“You see it time and time again, but cash payments should not be mingled with petty cash,” said Joe Capko, senior consultant with Capko & Co., a medical practice consultancy based in San Francisco.
The risk of embezzlement
The second step is to have procedures in place that reduce the opportunity for theft. Cash drawers should be assigned to one staffer during the day, and the amount should be tallied by at least one other employee and a physician at least once a day. This approach should make it easier to discern why they do not and who is likely at fault if the numbers don't balance.
“Most practices do not have a policy on handing cash,” Devitt said. “You need to develop something. Start by devising opening and closing procedures and then go from there.”
Money should not be allowed to build up and should be taken to the bank on a regular basis. “More frequent is better than less frequent,” Milburn said. “You don't want to be keeping a lot of money on-site.”
The amount of change needed for the cash drawer should be determined by payment patterns. Most consultants say $200 in small bills is a good starting point, but many practices will need less to start the day. Few practices need coins.
“Most practices can probably get away with $100 in tens, fives and singles,” Devitt said. “Others can get away with $50. And you should be gaining cash as you go through the day.”
In a separate petty cash drawer, employees should be required to provide receipts or some kind of voucher whenever money is removed for small purchases such as office supplies or doughnuts for an office celebration. These, plus the money left over, should always add up to the amount of money initially placed in petty cash, which should be counted daily.
The third step is to develop strategies that record the receipt of cash. Patients who pay with cash should be given numbered receipts. That makes it clear if any receipts disappear with the cash they record. The amounts should be correlated with the appointments for the day. The documentation also can be used to demonstrate that the money was collected and that the practice is complying with insurer contracts.
“Practices waive co-pays all the time for various reasons,” said John Shufeldt, MD, an emergency medicine physician and lawyer with a medical practice consultancy based in Scottsdale, Ariz. “But health plan contracts require collecting them and deductibles. It should never become a habit and increase your liability.”