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Collections in the medical industry

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Explain in detail, whether should a financial manager collect expected money up front or allow the patient to make payments to assist with co-payments or deductibles?

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Solution Summary

To collect up front for medical treatment - should versus practical?

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When we talk about patients, the assumption is we are discussing medical issues. On that basis we need to understand the difference between what SHOULD be done versus what is practical within the context of the medical industry.

From a business standpoint, what should be done is to collect cash as soon as possible. This leads to reduced risk of collections and improved cash flow for the firm, the business, the medical practice. Further, the firm has the cash immediately, while not having to wait for deductibles and/or payments to be made (likely with no interest provisions).

But based upon the fact that the environment has medical and payment issues, as well as insurance related payments, there are other areas to consider.

Let's use an extreme example, but one that happens and is indicative of issues which may ensue. Suppose we have a retired person on a limited fixed income with heart problems. They have been seeing doctors and specialists for about 10 months with alternative diagnoses, but no firm understanding of the cause of the heart issues, nor a firm course of ...

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