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How Medical Practice Management Software Can Solve Healthcare Cash Flow Problems

The healthcare industry has witnessed a lot of changes recently. With the pandemic knocking at our doorsteps, the integration of technology into healthcare became inevitable. The healthcare sector is no stranger to digital transformation as several telehealth options have become prevalent.

For example, improving cash flow in dental practices is considered one of the topmost priorities. The cash flow in practices such as dental are critical for its success but on the other hand cash flow should be efficiently managed. Most such practices in healthcare struggle in the area of cash flow. This is where practice management software supports effective payment, accounts receivable, billing, and collections capabilities of a healthcare organization.

What Is Practice Management?

Practice management is a way to enhance professional satisfaction, improve practice efficiency and deliver quality patient care. Healthcare organizations set up practice management to manage patient tracking, scheduling, registration, patient accounting, and reporting through a particular workflow functioning across all operations. This helps the organization to manage a single platform to collect payments from all patient accounts.

What Is Practice Management Software?

Practice management software is built to help healthcare institutes run efficiently regardless of their size. In simpler terms, practice management software can be used by small and medium-sized practices to manage their daily operations such as administrative functions and finance, with most using it to connect with EMR (electronic medical record). Due to the increase in demand, today many healthcare software development companies are developing revolutionary practice management software.

Below mentioned are a few insights about cash flow in healthcare systems.

  • To foster a health practice, it is good to review your payment system so that it can cater to prompt payment. As it is seen that patients who pay on time are likely to opt you for their future healthcare needs.
  • It is seen that delinquent accounts depreciation at a staggering rate of 5% every day. So for every month that passes by, a value of around 15% disappears for account receivables.
  • Account receivables are considered to be the largest financial assets for most healthcare organizations. So many organizations are taking advantage of new cash flow solutions and managing them efficiently.

On-Time Payments

In a report by TransUnion Healthcare, it was found that there was around an 11% increase in the average out-of-pocket costs in 2017. This was an increase from $1,635 in the fourth quarter of 2016 to $1,815 in the fourth quarter of 2017. The report indicated that nearly half around 49% of out-of-pocket costs were under $500 in 2017, around 39% ranged between $501 and $1000 and around 12% was over $1000.

The shift of financial burden from the payer to patients requires a set of practices that is mindful of the cash flow. In reality, patients are considered to be less reliable than their insurers which it comes to payments, keeping in mind that some of the patients are unable to pay their entire medical bill. 1 out of 7 people say that their families are unable or struggle to pay their medical bills, says a report by the Centers for Disease Control and Prevention.

Delinquent Accounts

Nearly 44 million Americans have unpaid medical bills, shows a report by the Consumer Financial Protection Bureau. On the other hand, American’s credit report displayed that nearly half of all the overdue debt reported came from medical expenses. There are multiple reasons responsible for this, such as misunderstanding amongst the doctors who are in-network, unexpected medical bills, expensive hospital stays, and ambulances rides.

The issues pertaining to delinquent medical bills are delicate and complicated. The practices concerning collections are one of the most scrutinized processes when compared to any traditional commercial business. In a conventional setting, customers are sent multiple texts, phone calls, letters from telecom companies and other commercial businesses when the bills pass their due date. This is not the case with healthcare institutions.

Enhance Practice Management Software by Integrated Payments

Making the payment process easy for the patient is one of the most effective things a practice can do. This will increase and improve the collection process. All of this means is that if we enable patients to pay by whichever method they are comfortable in when they visit, it will improve the cash flow process.

As a healthcare organization, you should accept cash, debit, and credit cards, payments through digital wallets and checks. You also need to check how much is covered by the insurance and how much the patient would be copaying.

Keeping a record of the credit card information (with the rightful consent of the patient) is very important. This also requires adherence to PCI guidelines. The benefit of this is that it enables the organization to set up recurring payments allowing practices to automatically process the payment from the patient.

In this digital era, healthcare organizations can send notifications through email, text messages to patients to pay their bills online. The system should be capable of collecting credit card payments over the phone too. Any payment, regardless of how they are made, should automatically add to the patient’s ledger, offering transparency and clarity into the practice’s accounts receivables.


Payment is the missing piece of the puzzle. It is an important component of any medical practice management software. Now many companies are developing medical practice management software that takes a step further by aiding their practice users to streamline things from beginning to end. Let us see what the future will bring for practice management software.



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Nora Winkens

Nora Winkens

Daffodil Software is a partner in software technology for more than 100 organizations around the world.