Patient Billing and Collections Best Practices for Small Healthcare Practices

Patient billing and collections are among the most sensitive touchpoints in the patient experience. How your practice handles this process directly affects patient retention and your practice revenue.

Medical debt is a growing concern for many patients, and inflation has only exacerbated this problem. Patients often feel stressed and overwhelmed when they anticipate medical bills. While you may not have control over healthcare costs, you can control how you interact with patients about their bills and the payment collection process.

Patient billing and collections best practices include offering flexible payment options, proactively communicating with patients via digital channels, and providing clear, upfront pricing information. You can also improve your medical billing process through the right technology.

Read ahead to learn best practices to inform your billing and collections process. Then explore Weave’s capabilities for small and mid-sized practices looking to simplify collections.

Why patient billing and collections are a growing challenge

Today, patient billing and collections are more challenging than ever. The average medical debt per patient has risen significantly in recent years, with approximately 36% of U.S. households having medical debt in 2024. Other concerning statistics include:

• Approximately 36% of adults say they went without health care in the past 12 months because of cost.
• Around 4 in 10 adults say they have not taken their prescription medication in the past year due to costs.
• Just under half of U.S. adults, 44%, say it is very or somewhat difficult to afford health care costs.

Medical care is a basic necessity, and many people have no choice but to seek care knowing that they may not be able to afford the final bill. This means that collecting payment from them can be challenging, and the way you approach the billing and collections process can make a real difference.

Patients often rely on health insurance to manage medical expenses, but this benefit does not always reliably cover their bills. On average, health insurance covers approximately 73% of total health spending, leaving patients with the remaining 27% to pay out of pocket. Patients have also had to shoulder a greater share of their medical costs due to higher deductibles and out-of-pocket maximums.

Unpaid bills and aging accounts represent a persistent cash flow challenge for independent practices operating on tight margins. But when your practice also struggles with poor billing communications, this issue can be further exacerbated.

It’s time to start treating collections as a patient experience issue rather than just a financial one.

The patient collections process explained

Evaluating each stage in your patient collections process can help you identify potential areas of improvement. Then, you can implement patient billing and collections best practices to refine those stages.

Here are the key stages in the collections process:

1. Registration: When a patient books a new appointment, your collections process begins with insurance verification and eligibility checks. Completing these steps prior to the appointment is essential for supporting reimbursement.
2. Estimate and copay collection: After verifying the insurance coverage, estimate the patient’s out-of-pocket responsibility so they know what to expect after their appointment. You’ll also need to collect copays before the appointment.
3. Claim submission: Following the appointment, the services rendered are coded into the appropriate categories, and you would submit a claim to the insurance payer. The insurer would pay their portion of the medical services and send a statement detailing what the patient owes.
4. Patient billing: At this stage, the patient receives a bill for the remaining balance. If the patient does not pay immediately, you may send additional statements over the following 90 to 120 days before notifying the patient that their account is in danger of being sent to collections.
5. External collections: If the patient fails to pay their bill after the deadline, many medical practices write off the account as bad debt and transfer it to a third-party collection agency.

Collections activities span the entire patient journey, from the moment a new or existing patient schedules an appointment. Waiting until after the visit to address financial conversations will put you at a disadvantage from the get-go.

Patient billing and collections best practices start with providing accurate upfront cost estimates so patients can plan their finances. This reduces the likelihood of surprise bills that patients cannot afford.

Optimizing the post-visit billing and follow-up process can further support collections. This is the stage where many independent practices lose ground, especially when they rely on mailed statements and manual outreach, which can take significant time to track and process.

Patient billing and collections best practices

You can’t control whether or not patients pay their bills on time, but you can take steps to aid the collections process overall. Following certain best practices helps you:

• Build trust with your patient base
• Minimize surprise bills so patients can plan for the financial burden of their care
• Remind patients at the optimal times about overdue bills to increase the likelihood of them making payments
• Make paying bills as convenient as possible to minimize barriers

The strongest collection strategies involve a combination of proactive communication, transparency, and flexibility, rather than any single approach.

Collecting a deposit or estimated patient responsibility at the time of scheduling is one of the most effective ways to reduce the post-visit collections burden. Offering flexible payment plans tailored to each patient’s financial situation can also be more effective than expecting patients to pay the full balance at once.

Practices that communicate clearly about costs before and after appointments often experience fewer billing disputes and overdue accounts. They also promote stronger patient loyalty because their patients understand their financial responsibilities before the appointment begins.

Finally, tracking collections in real time and monitoring key metrics can help you identify problems and trends in your payment billing strategy, allowing you to adjust them before they worsen.

Communicate costs clearly and early

One of the most important best practices in patient billing and collections to prioritize is communication. Patients should never be surprised about the size of their medical bills. In some cases, patients may even choose not to go through with an appointment without an accurate, upfront cost estimate, so it’s worth your efforts to ensure they are well informed.

Pricing transparency directly impacts appointment retention and collections. One way to prioritize transparency is to send automated cost estimates prior to the appointment. You can maintain a Good Faith Estimate chart of the typical costs for different types of appointments, then use practice management software to automatically send those estimates based on the type of appointment the patient booked.

Clear communication also relies on your front-office staff having the training and skills to hold compassionate, transparent financial conversations with patients before their visits. Patients should not feel as if you are trying to hide pricing information or avoid giving actual monetary estimates. This practice can significantly reduce the volume of post-collections work.

Effective pricing communication can improve both your collections strategy and the overall patient experience, making it a worthwhile investment for long-term retention.

Offer flexible digital payment options

In addition to providing clear and transparent billing communications throughout the patient journey, you can support collections by offering flexible, convenient payment methods. Your goal is to remove as many barriers to paying medical bills as possible, and for some patients, payment methods are barriers.

Patients may not feel inclined to call your practice, wait on hold, and relay their credit card information over the phone. The same is true for writing a physical check and mailing it in to your practice. These are time-consuming processes that patients might easily push to the back burner.

However, offering convenient options like text-to-pay, online payment portals, and in-office digital payment options can give patients the flexibility to pay on their own schedule and through their preferred methods. Patients can easily pay their bills in just a few seconds and move on with their day.

You can also make your payment process more convenient by offering multiple payment collection points:

• Upon scheduling, ask patients for a deposit, such as 50% of the expected bill.
• After the service, but before they leave the facility, give patients the option to pay the remaining balance.
• In the days and weeks ahead, send periodic reminders about the remaining balance.

Automate follow-up and reminders

Automating steps in the payment collection process can also provide worthwhile benefits. Your practice can reduce administrative burdens and save time, and patients can receive timely reminders and follow-ups without your manual intervention.

For example, many medical practices have begun using medical billing software to send automatic reminders to patients with overdue bills or outstanding balances. Automated text and email reminders help reduce the time between billing and payment by giving patients fewer opportunities to forget to pay their bills.

Weave’s communication platform is a practice management platform that enables front desk staff to automate balance reminders, send payment links via text, and follow up on overdue accounts through convenient communication channels. Weave can personalize communications by including the patient’s name, the balance amount, and a direct payment link to their bill. These tailored messages increase patient satisfaction and the likelihood of receiving prompt payments.

Often, practices that set up automated follow-up sequences for aging accounts recover more revenue with less effort than those that rely on manual, staff-initiated outreach. You can view automations as an adjunct to your existing patient collections process, or replace certain steps with automatic communications to save time.

How to make collections feel patient-centered

The patient billing and collections best practices above can help you improve payment follow-through. However, taking additional steps to make collections feel more patient-centered can also benefit your practice.

Patients often have a negative impression of the billing process. They may view medical practices as greedy or question the steep costs of services. But maintaining a fair, transparent billing process designed with patients’ financial situations in mind can help mitigate these concerns and make patients more likely to pay promptly.

Examples of solutions to consider include:

• Payment plans
• Financial assistance
• Flexible timing options

When front-office staff are equipped with complete, up-to-date patient information at all times, they can better personalize financial conversations to reduce friction. The right practice management software gives you a quick view of conversation histories and previous billing communications, providing tailored assistance when patients call.

Such integrated communication tools can allow you to deliver billing follow-up messages that feel personal and timely rather than automated and impersonal. Combining automatic reminders with phone conversations may be a good way to gain the best of both worlds.

Compassionate collections does not mean lowering expectations for payment. Instead, it simply means removing the barriers that make paying bills feel difficult or confusing for patients.

Common patient collections mistakes to avoid

Along with implementing the patient billing and collections best practices above, you should also take care to avoid these common mistakes:

• Waiting too long to discuss payments: If you wait until after the visit to have financial conversations, patients may be unprepared to make a payment or surprised by their bill, decreasing payment compliance.
• Relying exclusively on mailed statements: Paper statements sent via mail are at risk of becoming lost or overlooked, and they may take weeks to arrive. Instead, you can combine mailed statements with text and email notifications delivered immediately once a patient’s bill is finalized.
• Failing to verify insurance coverage before the appointment: Insurance verification should always be completed before a patient’s appointment to ensure that they have the necessary coverage for the procedure. Failing to complete this step could lead to claim denials and patient billing surprises.
• Using inconsistent follow-up cadences: When some accounts receive multiple contacts and others fall through the cracks, patients can develop a negative image of your practice. You also experience unpredictable revenue and cash flow.
• Neglecting to track collections performance metrics: Failing to review metrics about your billing process regularly can mean overlooking problems that are costing you money.

Correcting these issues is another good starting point for improving your collections process overall.

How Weave helps practices improve patient billing and collections

Weave’s communication platform is a helpful tool for practices looking to enhance patient interactions and relieve administrative burdens. Our all-in-one patient engagement platform is designed specifically for small and mid-sized healthcare providers, including dental, optometry, veterinary, and similar practices.

With Weave’s integrated texting, payment, and reminder tools, you can automate much of the patient-facing side of the collections process. Send balance notifications automatically from patient profiles, and invite patients to pay through convenient digital methods and text-to-pay links. You can easily implement these features without adding complexity to your existing workflows.

Weave allows you to send automated payment reminders and collect balances via text, all from a single platform integrated with your existing practice management system. This platform is designed for front-office staff who need tools that are intuitive and immediately useful, not software that requires weeks to learn and dedicated IT support.

Final thoughts on patient billing and collections best practices

The most effective patient billing and collections practices rely on three criteria:

• Upfront transparency about appointment costs
• Flexible digital payment options that make paying bills convenient
• Proactive, automated communication throughout the patient journey

Your practice can start taking steps today to improve collections without overhauling your existing systems. The right patient communication and payment tools can produce measurable results quickly and work seamlessly alongside your current setup. 

Practices that treat billing as an extension of the patient experience often outperform those that view it solely as a back-office function. Remember that every uncollected balance represents a missed opportunity to build patient trust and drive long-term retention.

See how Weave can improve your collections process

Weave’s communication platform is built for practices that want to collect payments faster and communicate more clearly about bills and balances. Our platform makes modernizing your operational processes straightforward, with user-friendly tools and an easy-to-navigate interface that you can learn quickly.

Request a demo today to learn how Weave’s payment and communication tools can fit into your existing practice setup and improve overall patient billing and collections.