The Executive Suite: Should Your Practice Charge Patient No-Show Fees?

Despite your staff’s best efforts to remind patients of their appointments, you’re still likely plagued by one or two no-show events every day. The MGMA has estimated that medical practices average a 5% to 7% no-show rate.

But that’s not so bad, right? After all, you can’t expect every single patient to show up as planned, can you?

Perhaps you should. If the average visit in your office yields a $25 co-pay and a $90 reimbursement, just two missed appointments per day can cost your practice nearly $60,000 per year. And that estimate excludes the administrative and payroll expenses you lose scheduling and rescheduling that appointment.

Many medical practices realize the loss of revenue missed appointments inflict on their businesses. One Midwestern practice with an 8.7% no-show rate in 2010 started requiring patients to sign appointment agreements as part of a formal plan to fix the issue. The result? By 2014, their no-show rate dropped to 1.7%.

A pediatric practice also looked at their no-show numbers. They experienced 389 no-shows appointments from 310 patients (some missed more than one). At an estimated $112 lost per appointment, their total came to $43,568 in lost revenue that year. The practice administrator estimated a $25 no-show fee would recoup $9,725, but that assumes a 100% payment rate.
Taking a cue from the hair salons and hotels of the world, some healthcare establishments charge patients no-show fees for blowing off appointments or canceling at the last-minute. But should they? Loud voices in the medical industry argue both for and against no-show charging.

IN FAVOR of a FeePatients tend to see medical practices solely as healthcare providers, not as functioning businesses. As such, they’re far more likely to skip out on a medical appointment than they would be to dodge a rental car reservation.

So there’s definitely value in a policy that makes it clear to patients that a physician’s time, effort and services cost money.

“There is a belief that the doctor will not ‘miss the patient’ or time,” says Drew Stevens, Ph.D., president of Stevens Consulting Group. “However, there are two issues here: one, another patient could have taken this appointment, and two, that is lost revenue for the doctor.”

Charging a no-show fee is the only way to earn back even a fraction of that lost revenue. A blanket $20 fee for every missed appointment may not recoup anywhere near what your practice would have earned in the actual encounter, but in today’s healthcare environment, many docs feel every extra dollar helps.

If your payer contracts allow it, you can collect a patient’s credit card information while booking his or her appointment – communicating your no-show policy as you do – and automatically collect your charges when a scheduled visit gets skipped.

Part of the point of having a policy in place, though, is hoping you don’t have to enforce it. The threat of the fee may be all it takes to get patients who would otherwise stay home to show up.
Practices often find that no-shows are committed by “repeat offenders,” so a sudden change in your office’s policy could scare patients into changing their bad habits. One practice reported moving from a 17% no-show rate to less than 1% after instituting a fee.

AGAINST a FeeOr, a sudden change in policy could spur your chronic skippers to head for your closest competing provider organization.

“I worked with one practice that realized many of the patients they were charging for missed appointments also brought in the best reimbursement,” says Elizabeth Woodcock, a practice management consultant. “By comparing chart transfer requests and no-show charges, the practice soon realized that a significant minority of these more lucrative patients transferred their care after receiving a billing statement that contained a no-show charge.”

Even if perturbed patients don’t leave your practice due to the fee policy, they may still resent being charged and could publicize their displeasure to friends, family, or in an online review.
Plus, unless you have credit card on file as discussed above, it can be difficult to get a patient to pay his no-show fee at all. The expense of mailing a bill for the missed-visit charge and the hassle of repeatedly requesting that a patient pay up may be more trouble than the fee is worth.
No-show fees can also project an image of inflexibility to your patients. After all – things come up. Patients often have legitimate, unavoidable reasons for missing appointments or canceling at the last minute. A rigid fee policy can alienate busy patients.

You could always start a more lax policy – some practices waive the fee on the first instance or in extenuating circumstances – but that can open up its own can of worms.

What counts as “extenuating?” Who decides when not to enforce the policy? Are you keeping records of which patients have already received their one waived-fee credit? It can be easy for miscommunication to occur and for someone to incur charges they thought they’d avoided.
So is a partial reimbursement on lost time and revenue worth potentially upsetting your patients over? That’s up to you to decide.