One of the biggest challenges of medical practice management is cash flow management. In theory, it seems as simple as providing a service, then collecting the payment. In reality though, poor planning, insurance paperwork, high patient deductibles and a lack of employee training often creates collection inefficiencies and causes cash flow problems. The good news is that there are proven strategies to improve cash flow starting today.

Plan for Cash Flow Challenges

We have all heard the saying that if you fail to plan, then you should plan to fail. In the world of medical practice management, this saying is especially relevant. Due to the fact that the majority of patients use medical insurance to pay for services rendered, getting paid requires careful planning. Waiting to be paid for long periods of time after service is provided is what causes many medical practices cash flow problems.

By planning for certain large cash flow expenditures like payroll and taxes, practice management can prepare a game plan for ensuring they have cash available as needed. It is also recommended that predictable situations that happen every year that drain cash flow should be anticipated and planned for to keep cash flow problems from developing. For example, it is common for patient traffic to slow down at the beginning of each year offsetting the rush for treatment at the end of a year when patient deductibles have been met. Embracing the natural business cycle of a medical practice and planning for the resulting cash flow challenges ahead of time will lower the stress for all personnel concerned.

Establish a Payment System to Improve Cash Flow

Like any valuable management tool, the success of a viable payment and collection policy is tied directly to the staff’s understanding of the plan and motivation to implement the policy. Training staff members about the details and importance of a plan is critical for improving cash flow. Ongoing training and feedback are important for keeping key employees apprised of any operational modifications. It is also important to praise employees as they meet set goals. This type of management feedback reinforces the importance of the plan and keeps employees paying attention.

Communicate a Clear Payment Policy to Patients

Experts agree that collecting payment or co-payment at the time of service is critical for creating a sound collection policy. When the payment policy is clearly posted for patients to see and sign off on, there is generally less problem collecting payments at the time of treatment. Getting patients to sign a payment policy form indicating they understand the policy prior to treatment is a good step in the right direction.

Anticipate Payment Challenges

Sound medical practice management dictates that patients who are struggling with unpaid balances need to be called for the purpose of setting up a workable payment plan that they can meet. In a poor economy, patients often find themselves without insurance and having to pay cash payments for care. Anticipating these situations and solving the patient’s payment issues before they become a source of embarrassment or cash flow problem is a good way to prevent delinquencies and charge offs.

Use Medical Reimbursement Specialists

Accurate preparation and transmission of medical claims to health insurance companies is a job for properly trained specialists.  A reimbursement specialist can prove invaluable in many ways to a medical practice. With their expertise in working with insurance and government payors, you can realize an increased reimbursement rate as well as more realiable cash flow.


A healthy cash flow is as important to achieving a successful medical practice as offering excellent patient care. While keeping payments coming in at a pace to pay the bills is a challenge, there are proven steps that can be taken to master the cash flow challenge. Planning is key for all elements of medical practice management, and cannot be overlooked as the main ingredient for maintaining financial stability.