3 Ways You're Losing Money in Your Testing Practice (and What to Do About It!)

I remember the day in 2014—five years after I started my practice—when I finally discovered the “patient aging statement” in my EHR system. I clicked it and up popped a spreadsheet with all of my clients who owed money on their bills.

It was over $90,000.

I looked around my empty office, afraid that someone could hear the silent screaming in my head. How could this happen?! I was doing really well at collecting money, right?

The data would say otherwise.

Years later, after I got my collections under control and started coaching other psychologists, I learned that I wasn’t alone. Over the years I’ve found some common ways that we lose money in our assessment practices. Fortunately, there are many ways to turn things around and get your finances under control. Let’s dive in.

1. Not charging for the work you do

Many psychologists either don’t charge for all the hours spent on an evaluation (underbilling) and/or don’t value their services appropriately (underpricing).

What to do:

1. Conduct an honest assessment of the time you spend on each evaluation over the course of a month. Account for every minute, then compare that number to what you would usually bill for. If there’s a gap, create habits to account for the time you’re missing.
2. For those who take insurance—contact your insurance company and determine if you are allowed to bill clients out of pocket for “non-covered services” like educational testing. If so, put processes in place to do so.
3. Do a revised search of the market prices in your area. Place yourself just above the middle of the market. Testing is a specialty that commands a premium fee.
4. Consider value-based pricing for private pay clients. Rather than charging by the hour and losing money as you get more efficient, charge a flat fee per evaluation that is actually slightly more than your usual hourly rate.
5. Request a reimbursement increase from insurance companies at least once a year.

2. Not collecting on what you bill

My earlier story highlighted this problem. In my experience, three main situations contribute to overdue collections:

• Clinicians don’t have a clear accounting system to track payments.
• Clinicians don’t follow up on insurance denials and errors.
• Clients are unprepared for the large bills associated with testing services.

What to do:

1. A good electronic health record (EHR) can solve the problem of not tracking payments. I prefer TherapyNotes™ because it offers a testing-friendly note template.
2. If you take insurance, consider a billing company. Yes, they charge a percentage of collected income, but the cost is typically MUCH less than the income you lose by not collecting on bills.
3. Be very clear with clients on what your services cost. If you take insurance, make sure to verify benefits ahead of time so that you can communicate an estimate of cost before the evaluation starts. If you’re private pay, talk about fees on the very first phone call before scheduling.
4. Have solid payment policies in place. For example:
   
   1. Take a partial payment at the initial interview or on the day of testing. I recommend at least half of the estimated total for the evaluation.
   2. Strongly consider requiring a credit card on file for all clients to protect against unpaid bills. Modify your disclosure/office policies document to make it clear that you will charge that credit card if a balance goes unpaid for 90 days.
   3. Contract with a collections agency for the times when clients just will not pay. Look for a collections agency that specializes in medical or mental health practices.

3. Doing work that you should not be doing

Many of us get into private practice because we are driven individuals with the belief (usually correct) that we can do many things well. Unfortunately, that belief often leads practice owners to continue performing menial tasks way longer than they should. Examples include:

• Answering the phone
• Keeping your financial books
• Social media management
• Clerical tasks (mailing, copying, etc.)
• Web design

What to do:

Think about every task you do and ask yourself, “Will this cost me less than $100/$150/$200 per hour to outsource?” If the answer is “yes,” make a list of all those tasks and start delegating! Some options:

1. Hire a virtual assistant (VA). Virtual Staff Finder has a comprehensive process for matching you with a VA that will rival any assessment we give!
2. Consider taking on a psychometrist.
3. Think about hiring an undergraduate intern for clerical tasks.
4. If you have a larger practice, do a cost/benefit analysis to figure out if an in-office admin assistant makes sense.
5. If you delegate nothing else, strongly consider hiring someone to answer your phone. Booking just one evaluation for $1500 can pay for nearly 100 hours of a receptionist’s time!

Whether you identify with one or all of these issues, don’t panic! There is hope. I experienced all of these situations and have worked hard to turn things around over the years—it CAN happen!