Sign On By Marjorie Lauri, Senior Treasury Management Healthcare Sales Lead, Wells Fargo
Electronic payments by consumers may be on the rise, but accepting cash remains common practice for most healthcare systems. Managing those cash receivables efficiently—both at point-of-service and in the financial back office—is key.
Fortunately, there are effective ways to minimize cash payments. A regional non-profit system with approximately 850 beds, for example, achieved impressive results shifting a substantial portion of their cash payments to electronic methods, then reducing annual armored car fees by nearly $250,000.
The transformation of consumer cash handling started when an analysis revealed the healthcare system’s cost to accept and process cash was approximately 20 percent of its value. They knew change was in order.
Extensive cash handling creates delays, risks, and costs
Cash in healthcare persists for a number of reasons. Certain patient populations prefer cash to checks and credit or debit cards. The unbanked and under-banked have few options outside cash. Still other well-intentioned consumers believe that paying in cash is better for the provider as it eliminates the merchant services fees associated with credit or debit card transactions—a common message among non-profits and small businesses.
Hospitals, physician offices, clinics, and other facilities can, however, implement several practices to shift a noticeable portion of cash payments to other methods. Behind the scenes, there are options to streamline reconciliation, reduce risk, and accelerate deposit timeframes.
The benefits of improving cash management can be immediate and tangible. These advantages include:
- Faster deposits
- Stronger working capital
- Less risk of theft or loss
- Automated reconciliation
- Time savings for staff and patients
- Improved patient experience
Best practices to reduce cash payments in healthcare
Setting change in motion begins by understanding your healthcare system’s greatest pain points associated with cash payments, then developing strategies specific to those areas. Optimizing patient copays for scheduled appointments, for example, will be different than reducing cash in the hospital gift shop, cafeteria, or parking garage.
Consider these best practices to alleviate the burden of cash payments in your hospital, clinic, or healthcare facility:
Educate customer service teams. It may sound obvious, but reducing cash often starts internally, by communicating your preference for electronic payments to frontline and back-office staff across the organization. These individuals represent the first contact with patients and will be invaluable in gently requesting non-cash options at point-of-service or on the phone.
Promote pre-appointment copays. Since the pandemic, most patients now use an online patient management portal for various activities. Healthcare systems that make copays a part of the pre-appointment process can streamline the patient experience and collect more funds digitally rather than in cash. This change not only reduces cash, it speeds up the check-in process for staff and patients.
Update your communications. Spreading the word is essential. Make sure to revise signage at point-of-service to note your preference for card or e-check payments. Provide talking points to staff who handle customer service, patient check-ins, and payment inquiries. Where possible, direct consumers to your online patient portal to accept digital payments conveniently and securely.
Outsource non-essential functions. It takes a tremendous effort to minimize cash across an entire hospital or clinic, especially in non-clinical areas. The regional healthcare system decided to outsource certain functions, such as managing the parking garage, which eliminated the burden of cash handling for the internal team. Their vendor also manages PCI compliance and other requirements associated with accepting credit and debit cards.
Accept cash for exact amounts only. When patients do pay with cash, consider taking exact amounts only. This shift, particularly with copayments that typically amount to whole dollars, will minimize the time, effort, and cost of maintaining “change” on hand. No more cash and coin orders to deliver and store, and less risk for staff. Motivates patients to pay via card or check if they don’t have the exact amount.
Streamline reconciliation. Cash can be onerous to reconcile cash since the timeframes for deposit are longer, and handwritten (or manually tallied) deposit slips are ripe for errors. When cash is accepted on an exception basis, the point-of-service staff is required to flag cash payments in their patient accounting system; finance staff then pull reports and matches cash payments with bank deposit data.
Review your options for the logistics of cash handling
No matter how effective your efforts, a portion of your healthcare payments will likely remain as cash. The logistics of moving these funds from individual clinics to a central back office or to local bank branches for deposit can be significant. Work with your bank to make sure you’re leveraging the latest tools, the right armored carrier schedules, and even smart deposit slips and bags. Every cash touchpoint you can eliminate or improve will have a tangible impact on your productivity—and your bottom line.
A bank with dedicated healthcare experts and proven experience in your sector can also help you achieve your goals. Starting with a region or location in a pilot program gives you the chance to launch and learn. Collect metrics, iron out details, then communicate your success as you expand your cash reduction strategies across the organization.
