Cancellation Fees: How and When to Use Them

Cancellation Fees: How and When to Use Them
Cancellation Fees: How and When to Use Them

“A significant portion of no-show patients are habitually irresponsible people,” said Keith Borglum, a consultant with Professional Management and Marketing out of Santa Rosa, Calif.

No one is perfect. Everyone forgets a scheduled meeting now and again. But if you take a moment to look at your practice and analyze who is missing appointments, it's likely a handful of repeat offenders.

So what do you do about these people who are wasting the practice's time and money? More and more, physicians are choosing to implement no-show fees. Here's what you should know before you implement this kind of policy.

The Purpose


Cancellation fees are not meant to fully recoup the missed appointment. Their goal is to change patients' habits.

“The purpose is to have patients recognize that this time is reserved for them and there is an expense whether they show up or not,” said Deb Hill, manager at the Atlanta-based The Coker Group. “I think once you've implemented a policy like that, patients become more educated.”

Gray Tuttle, principal at Rehmann's Healthcare Management Advisors in Lansing, Mich., said cancellation fees are justifiable. Not only is there a clear economic loss with a missed appointment, but it is a risk management issue when patients don't review medications or get test results.

“If patients have skin in the game, they will develop better habits in the future,” he said.

First Steps


There are a couple of things you might want to do before deciding whether to use cancellation fees. First, make sure your office is doing what it can to reduce the number of no-shows. Something going on internally may be contributing.

The Medical Group Management Association created a blog with 30 ways to reduce no-shows, including providing discounts to patients who make their appointments and have staff place reminder calls before visits.

“Any patient scheduled for anything other than a routine follow-up the next day gets a reminder phone call,” Borglum said.

Are you sending reminder cards, especially for visits that were scheduled a long way out? Do physicians reschedule frequently? Do patients have to wait for an hour in the waiting room for visits? These could all be contributing factors.

“You need to make sure there isn't some underlying cause,” Hill said. “If you have a large increase in no-shows, you need to get to the bottom of what is going on.” 

Other Options


Borglum said his preference is that offices don't use no-show fees, but Hill has mixed feelings about them. Hill said you have to consider things like your payer mix: if the pay is predominantly Medicaid, you aren't going to collect. Additionally, remember that most patients don't like it. Even if they know about the charge, it may alienate them.

If you don't want to use no-show fees, you might opt for making patients pay in advance. Particularly for visits that take up a large block of time, you could have them remit their co-pay in advance, then put it toward the cost of the claim.

Borglum said fees might backfire and make patients feel justified for missing appointments. If you define a price for your time and they pay it, they won't feel guilty. 

Implementation


If you want to implement a no-show policy (or you have one in place, but want to begin enforcing it) the most important thing to remember is communication.

First, make sure patients know why you are doing it. If you are changing or implementing the practice, Hill said, you may want to send out a letter explaining the reason. She recommends telling them that practice costs and no-shows are increasing. Explain why it is important to keep an appointment and how it is detrimental to the practice when they don't.