Money: The Post You Don’t Want To Read But Should

First off, not only am I not a financial advisor, an economist or an accountant, I have never been the poster-boy for “financial whiz.”  I say this out of neither pride or shame, but for two other reasons.  First, as a caveat to the reader that all of this is based on personal learned experience and therefore as limited as it is true for me.  And second, because if I can do this, I think you can too.

Money is the Achilles heel of many therapists.  We are averse to think about or speak aloud about it, and we come by this aversion honestly.  At least in the US, we are raised and educated without a single class or course in financial planning or money management.  Ask yourself, what subject have I ever learned about in life that I avoided thinking or talking about?  But in the case of finances, many of us emerge into adulthood with huge blind spots about how to function in a capitalist economy and society.

In my coaching and clinical supervision with therapists, and in my talk with colleagues, I have heard some amazing examples of these blind spots.  I once heard a colleague justify not charging a patient for a missed appointment because if she has to miss an appointment the patient doesn’t charge her!  These statements bely an ambivalent and confused statement about money.  Patients are hiring us, we aren’t hiring them.  As uncomfortable as this assymmetry is, the fact is that we don’t pay patients to help us and they do pay us to help them.

I have launched into general diatribes before, but today I want to be really specific and concrete.  I want to share with you one pointer I share with all my coaching clients about how to make more money and how to manage it better.  I’m even going to give you a specific vendor link.

The pointer is this, if you want to make more money, take a look at the bank you’re using.  Making money isn’t just about your fee or caseload, but the fees you may be paying out.  (I know, some of you who’ve made it this far are already getting ready to click away, hang in there.)  One of the things large banks have is large overhead.  They are, for reasons too numerous and obvious, in a lot of distress these days.  For example, Consumer Reports estimates that the government legislature that required them to cap their fee each time you use your debit card at 24 cents a transaction is going to cost banks 6 billion dollars in revenue lost.  So to recoup their losses, they are finding other fees to levy on you that are legal.

What banks are banking on is that we’re afraid of change.  And let’s face it colleagues, most of us want to find a place to “park” when it comes to money management.  We want to find the fee we can set and not look at again rather than adjust it over time.  We want to program our billing into computers or contract it out to services so we can not deal with it.  And we don’t want to compare interest rates and fees, but rather find a bank and stick with it.

And the larger banks don’t just gouge you with fees, they use you in another way.  Maybe you’ve noticed that when you do use your ATM or the bank website advertisements come up that are eerily resonant with what you spend your money on.  This is because banks value your patronage for data mining purposes as well.  Many of them are selling this data to big business.  I am often struck by the irony that a profession which values privacy and confidentiality for our patients turns a blind eye or accepts the violation of their own financial privacy.  So if nothing else, do a little research about whether your bank sells your debit transaction or other data, and if they do, move.

Since 2009 I don’t think I have set foot in a bank to do actual banking.  The last time I went in the building was to have something notarized.  By the same token, my deposits have become much more quick and efficient in my business, and my fees have been minor.  Why is this?

It is because I use an online credit union, Digital Federal Credit Union in fact.  DCU is a completely full-service credit union with the emphasis on online banking.  This is not surprising since it began in 1979 as a charted credit Union for Digital Equipment Corporation.  The eligibility requirements are not at all onerous, in fact your interest in social justice can make you eligible.  I say this because my eligibility came from being a disability rights ally.  I joined the American Association of People with Disabilities.  That was it:  Fifteen bucks to a great cause and I was eligible to join DCU.

As an online credit union, DCU is actually more portable than my licensure!  I can move to any state, bank from any state, online.  Their technology and website are in my opinion excellent.  I can transfer funds easily from my account to other family members’ accounts at DCU, and interbank exchanges are almost as easy.

They have a great bill-paying feature that allows me to schedule payments electronically, either one-time or recurring.  The bill-pay feature has also been a lifesaver for me when I need to dispute something with a vendor or track how much I have spent on utilities for my practice or home in a given amount of time.

And at tax time, house closing, or any other time you need financial documentation quick, DCU allows me to download check images, statements, etc. into PC files.  Or if I am trying to sort my expense deductions for the year I can import the entire tax year into an Excel or other software spreadsheet to sort, locate, and calculate expenses.

But the thing about DCU that makes me go absolutely blissful is their iPad and iPhone app, because it allows me to take photos of checks and deposit them from my office, living room, wherever there is, well, the internet.  No more hoarding checks to make a trip to the bank, no more waiting in lines at the bank.  In fact, I often do my deposits late at night or on weekends, because banking hours aren’t really an issue.

Think about all the time you are spending, which is money you’re spending, on your banking.  Do you spend 30 minutes running to the bank each week?  That’s time you could see a patient.  Is your income stream stuttering because you avoid depositing check until you have to?  And clinically, what message(s) may you be sending your patient that you haven’t cashed their check yet?  If you want to be a better therapist, get better with your money.  And if you want to get better with your money, use an online credit union.

Oh, I have lots of thoughts and opinions on how to use technology to improve your therapy practice clinically and financially, maybe you want to work with me online or in person?



Don’t Run Your Practice Like An HMO

I was surprised today to get a letter from a local insurance company, authorizing payment to me for a session I’d done in September of last year.  I wasn’t sure whether to be annoyed or laugh (I decided to laugh) and as I was grumbling about insurance companies I realized that they have taught me what to do and not do with my own billing.

Let’s face it, most therapists don’t like billing and most therapists don’t like insurance.  (If you’re not a therapist, read on anyway, you might find it interesting.)  Insurance companies are as a rule very difficult to deal with.  They make us go through elaborate credentialing processes to join a network that pays us a fraction of our fee.  And when we submit claims they often hold on to them for months, delaying our payment.  Or they reject the claim because of some technicality, or request a half hour conversation with us to review the treatment so that they can find a reason to stop paying for it.  Insurance companies are insulated by layers of administration and bureaucracy, and finding the person to answer the question or authorize treatment can take forever.  In fact, the whole premise of insurance has been to have a large enough risk pool of paying clients that they can offset the damages they incur and still make a profit.  In short, insurance companies are avoidant, outdated, and hostile to claims.

So why are we just like them?

Therapists groan about insurance companies, and yet we often act just like them when it comes to running our business.  We avoid filing claims as long as we can, so that we’ll get reimbursement checks that are bigger and “worth the effort.”  We avoid streamlining our billing processes.  And we are extremely hostile when it comes to having to file claims to get paid.

Don’t run your practice like an insurance company. Instead, here are some suggestions for you:

1. Don’t delay your billing by unnecessary process. Take a few minutes to look at the way you process bills.  Are you writing them down in a ledger, maybe more than one?  Do you try to sort things by insurance company rotating different companies at different times of the month?  Do you have elaborate formulas for payment plans for your patients’ co-pays?  (That’s insurance fraud by the way.)  Do you have a calendar that you transfer to your ledger?  Or if you have a software program do you enter the same data in several different places?  If you are doing any of these things, you’re wasting your time.  Come up with one strategy and stick with it, and cut down the number of steps that any strategy you come up with has.

2. Don’t avoid by storing up your accounts receivable. You hate it when an insurance company sits on your claims, don’t do the same thing when it comes to your own accounts receivable.  Don’t store up and hoard your accounts receivable to bill “later.”  Your patients and you both deserve for you to bill promptly even if it is a $15 co-pay.  Don’t drag out your co-pay billing for more than a month at most.  Aside from sending a devaluing message to your patients, (“I don’t need that tiny amount of money”) it adds up and can become a source of anxiety to them.  Bill out in smaller amounts on a regular basis, and if you don’t, ask yourself what your behavior is expressing about billing.  Storing up your accounts receivable may present you with bigger checks later, but irregular ones.  For people who know the value of consistent structure, we certainly drop the ball on this one, and then what happens?  You see your bank account is low and you say, “I’ve got to do my billing.” And even if you send it out that day, you’ve just set yourself up for a few weeks of anxious trips to the mailbox to see if the money has finally arrived.

3. Don’t treat patient payments like a risk pool. When it comes to billing, don’t rely on a few consistently paying patients to help you avoid billing the rest.  If you allow patients to carry a balance set a dollar figure that is consistent across all of them.  Mine is $400, because I know that if a patient carries a higher balance than that I may start to get annoyed and that will create static in the treatment.  My billing office thinks my limit is too high, but it is what has worked for me and allowed me to be consistent.  By all means set your own limit, but don’t have 30 different billing schedules and expectations for 30 different patients!  It isn’t fair to the ones who pay regularly, and it also isn’t fair to the ones who don’t.  And it also isn’t fair to you.  This may work for the insurance companies, but it definitely won’t work for your business.

4. Do your billing every 1-5 days. You heard me, every 1-5 days.  None of this once a month or every few weeks or “when I have to” stuff.  You’re in business and businesses bill their customers promptly and regularly.  And here’s what’s really cool, if you bill every 1-5 days after a while you’ll begin to get paid every 5-7 days.  That’s it for this one, 1-5 days, no excuses.

5. Do lose the paper. Not as in misplace it, but as in get rid of it!  Many of you are probably saying to yourselves, “he’s crazy.  I don’t have time to do all that paperwork every few days!”  There’s the problem, you’re still using paper!  Start billing electronically, most insurance companies have that capability, and there are plenty of software programs out there that can help.  When I used software I would send out that days appointments at 5:30, took 15 minutes.  The first few times you will need to spend more time on it by typing in things to the program’s database, but after that it goes pretty quickly.  And if you can get in the habit of typing in the first part of the intake the day of the intake, that’s even better.

6. Do use a billing service. I saved the best for last.  If you don’t want to do billing yourself, fess up to it.  It’s a reasonable business expense to have.  I haven’t missed the money I pay to my billing service CMS Billing one bit.  The amount of money they have captured for me (including the check from last September) has probably offset what I pay them.  In addition, they do all my billing intakes, insurance authorizations, credentialing and customer service for billing questions.  The time they have freed up has allowed me to develop workshops, write this blog, and engage in other creative and lucrative aspects of my business.  Remember that when it comes to owning a business you need to spend money to make money.  Don’t be a tightwad, hire a billing service.  Then you won’t have to worry as much about the technology part.  But bear in mind that they can only bill as quickly as you report accounts receivable to them, so you still need to do that every few days.

As I write this, 97% of my accounts receivable are under 30 days.  I get my money with regularity, and my patients know what to expect when they reach the $400 mark.  This is possible for you as well!  As this fiscal year draws to a close, take some time to take stock of your billing practices.  If you’re acting more like a lending company or an HMO it may be time to change.