Doctor’s Office Cash Flow: Challenges and Solutions

Cash Flow
8 min
Nov 14, 2022

You became a doctor because you wanted to help people and make a difference. But the everyday stressors of running your practice are interfering with that goal.

While you were cramming all night in med school or working endless hours in your residency, you probably weren’t thinking that part of your job as a doctor would entail balancing the books.

But one of the biggest problems you may be up against in your career is cash flow in your medical office. 

The good news is that it doesn’t have to be this way. Keep reading as we discuss real-life doctor’s office cash flow challenges and propose some solutions to help keep you in the black.

Flexbase: Your Medical Practice’s New Cash Flow Solution

As a business owner, you know how important cash flow is to your medical office. But with the healthcare payment landscape constantly changing due to fluctuating insurance reimbursement rates and more people being self-pay, you may not have as much cash on hand as you need to efficiently run your practice.

Fortunately, you now can get the help of Flexbase for businesses. Flexbase lets you manage your finance operation in one place with …

  • Credit
  • Banking
  • Payments; and
  • Insurance

… all in one super-app.

The most exciting part of the Flexbase solution is our credit card which gives you ten times the credit of other cards and 0% interest for 60 days. That’s twice the time that most other companies allow for repayment — which lets you purchase supplies, build up your business through advertising, or whatever else you need.

You’ve worked hard to create your medical practice and you deserve a finance company that has your best interests in mind. Register for an account and let’s get started together.

What Is Cash Flow in a Medical Office?

Cash flow in a medical office is simply the amount of money moving in and out at any given time. It’s critical for medical practice owners to efficiently manage cash flow because failing to do so can prevent you from:

  • Paying your bills on time
  • Covering expenses
  • Keeping operations running well; and
  • Achieving and continuing a robust level of liquidity

But doctor’s offices face unique challenges that can make it difficult to have enough cash on hand from day to day. Dr. Hailee Rask, board-certified orthodontist and owner of Bluebird Orthodontics, describes her practice’s issues:

“As an orthodontic practice, we [have] faced cash flow issues since opening. We

offer interest-free in-house financing to all patients with a $500 down

payment and 18-month payment terms. This causes a lag between treating a

patient and collecting payment, especially when first starting out.”

We’ll hear from other doctors as we explore medical practice challenges and offer solutions to doctor’s office cash flow problems.

7 Doctor’s Office Cash Flow Challenges From Real Medical Practices

#1: Healthcare Collection Practices 

Healthcare cash flow often comes from multiple sources — namely, one patient may have some of its payments coming in from their insurance plan and the rest is the portion they’re responsible for.

Many patients may even have more than one type of insurance, which can further complicate things. This means that doctor’s offices must plan for different types of payment on any given invoice.

When a patient doesn’t pay their portion of a bill, things can get a little tricky. Unlike …

  • Internet
  • Cell phone
  • Utility; and
  • Other service companies

… healthcare offices can’t cut off patients or stop their relationships with them to incentivize them to pay.

#2: Patients Paying Higher Percentages of Deductibles

The National Association of Healthcare Access Management (NAHAM) reported that patient responsibility for medical bills was around 12% in 2007 and had risen to 30% in 2012.

They predicted that the number would continue to climb to around 50% in the following years, and indeed, has confirmed that some insured patients are currently responsible for up to 40% of their medical bills.

Medical copayments have also gone up over the years, forcing patients to cough up more money up-front.

#3: Increase in Self-Pay Patients has reported that from 2018 to 2020, the rate of private health insurance coverage went down by 0.8 percentage points (to 66.5%). We can only assume that these numbers have dropped even more in recent years with the way COVID-19 affected the job market.

That means more people than ever have sole responsibility for their medical bills, and sometimes they can’t afford to pay.

#4: Decrease in Insurance Reimbursement Rates

In the past, medical practices received the majority of their revenue from insurance reimbursements. But those percentages have been dropping for years and will likely continue to do so.

With more patients now being responsible for a bigger portion of their bills that they may not pay promptly, cash flow in doctors’ offices can be greatly affected.

#5: Patients Not Prioritizing Medical Bills

William Kemper, a pediatric dentist in Louisville, KY, put it best when he said:

“When it comes to collecting money from customers, commercial firms don't

have to deal with the same scrutiny as medical clinics. Waiting for a

patient to pay you is not the same as waiting for a mobile phone bill to be

paid. When everything else fails, most individuals don't prioritize their

healthcare needs at the top of their … list.”

#6: HMOs and Insurance Companies Taking Longer to Pay Claims

Dr. Michael May, medical director of Wimpole Clinic, believes that “slow and poor collection” is a common doctor’s office cash flow issue. He states:

“It could be because insurance reimbursement rates are

falling, where it takes a longer time for HMOs or other insurance plans to

pay claims.”

The longer medical practices have to wait to get paid for services they’ve already completed, the greater the danger of them not having enough cash when they need it.

#7: Higher Operational Costs

The operating costs of medical practices are rising faster and higher than the consumer price index. These increases in costs can put doctors in quite a bind when it comes to cash flow.

Medical practice operational costs may include:

  • Support staff salaries and benefits
  • Medical and surgical costs
  • Facility expenses
  • Information technology
  • Furniture and equipment
  • Insurance
  • And much more

And these things are only becoming more expensive as time goes on.

8 Solutions to Managing Cash Flow in Doctor’s Offices

#1: Utilize the Flexbase Card to Manage Cash Flow

The Flexbase card can give your medical practice much more financial freedom than other typical business cards.

Do you need to invest in a new, expensive piece of equipment? We give you 10 times the credit than the other guys, so we can help make this possible.

Have lots of bills you need to take care of while you’re waiting for your patients to fulfill their payment plans? Our card is interest-free for 60 days, so we make it easier to balance your responsibilities with your income.

Do you rely on your secretary or office manager to help you make purchases? Flexbase provides unlimited employee cards, but we can also equip theirs with spending limits and controls to help you stay on top of everything.

Contact Flexbase today and let us help your doctor’s office cash flow issues become a thing of the past.

#2: Collect Payment From Patients Upfront

Dr. Kemper suggests that you collect patient payments upon arrival. He says:

“In cases when a patient owes you money or has paid a copay for their

appointment, there are simple ways to boost the cash flow of your medical

firm. Patients' unpaid balances may be collected at the beginning of the

… visit by providers that use integrated practice management and

billing systems. Cash flow is protected since more payments are collected


#3: Pay Suppliers on the Due Date

Since most bills are not due immediately upon receipt, there’s no reason to pay suppliers right away if you’re experiencing cash flow problems. Waiting until the due date gives you time to collect more patient payments and pool the necessary funds.

#4: Reduce Office Inventory

Many doctor’s offices have supply rooms overflowing with stuff they don’t need right away. 

Medical practices should try to buy only what they’ll need for upcoming visits instead of stocking up for an entire year. This will keep bills low while also eliminating waste.

#5: Bill Patients for Missed Appointments

If you’re like most medical practices, your schedule is fully booked at all times. If someone doesn’t show up or cancels at the last minute, you usually aren’t able to fill that spot — which means both your time and money have been wasted.

Life happens, so give patients a reasonable timeline in which they can cancel (like up to 24 hours before), but charge them as usual if they miss the appointment.

#6: Collect Insurance Information When Scheduling Appointments

Dr. May believes that changes in daily practice can significantly improve collection percentages. He offers this advice:

“Staff should collect accurate insurance and contact information when scheduling appointments. This way, staff can … check the patient's insurance eligibility [ahead of time].”

#7: Offer Discounts for Services That Are Paid in Full

Dr. Rask employs this strategy in her orthodontic practice. She offers a 5% discount to patients who pay in full at the onset of services.

Even though a small percentage of patients choose this option, it still helps bring in more cash.

#8: Offer Payment Plans With an Upfront Deposit

This is a good way to spread out cash income without overwhelming patients who can’t pay everything upfront. 

Dr. Rask says, “The good thing is that once enough patients are on payment plans, monthly recurring revenue builds up and cash flow becomes more predictable.”

If you’ve tried many of our suggested strategies and are still struggling with cash flow issues, don’t forget about the Flexbase card. We are here to help.