As we approach the final quarter of the year, now is the time for dermatology practices to prepare for 2025. Thoughtful planning in Q4 can pave the way for financial stability and operational efficiency in the year ahead. Here are some strategic steps your practice can take to set the stage for success.
1. Build Up Cash Reserves for Q1
Each January, patient deductibles typically reset, leading to a temporary revenue slowdown for dermatology practices as payments from patients take longer to process. Across the 100+ dermatology practices we support, we’ve observed an 18% dip in revenues during January and February compared to other months over the past five years. This shift occurs because more of the payment responsibility falls on patients after insurance approval, requiring them to settle balances directly.
To mitigate this annual dip, consider setting aside additional cash reserves in Q4. Additionally, revising your financial policy to collect a portion of payments upfront from patients seen in January and February can be beneficial. By calculating an upfront collection amount—such as 50-100% of your average payment per encounter—you can better manage cash-flow challenges in the early months of the year. While collecting more may result in issuing refunds, it can also stabilize your practice’s finances and support uninterrupted patient care.
The infographic below provides a visual overview of the financial impact of Q1 deductible resets and the importance of building cash reserves to navigate this period smoothly:
2. Examine Your Expenses
Q4 is an excellent time to conduct a thorough review of your practice’s expenses:
- Facility and Provider Utilization: Evaluate whether you’re maximizing the use of your facility space and provider hours. Consider redistributing resources or adjusting provider schedules to enhance efficiency.
- Provider Compensation Plans: Review your compensation structures to ensure they are sustainable and motivating. A well-designed compensation plan is essential for retaining talent while maintaining financial health.
3. Create Your 2025 Budget and Forecast
Utilize accounting software or financial tools to review your 2024 expenditures and use them as a baseline for your 2025 budget. A well-planned budget allows you to anticipate financial needs and set realistic goals. Be sure to factor in any upcoming industry changes, including regulatory updates, that may affect your expenses or reimbursement rates.
4. Review Payer Contracts and Negotiate Better Terms
Q4 is an ideal time to assess your payer contracts. Are you receiving the best possible reimbursement for your services? Contact payers to review your current rates and negotiate better terms where necessary. This proactive approach can increase revenue and ensure your practice is properly compensated for the care you provide.
According to industry data, practices that regularly review and renegotiate contracts can see up to a 10% improvement in reimbursement rates. Don’t leave money on the table by accepting outdated terms.
5. Focus on Patient Collections
With patient deductibles resetting at the start of the year, having a strong patient collections process is crucial. Ensure that your front desk and billing teams are prepared to discuss financial responsibilities with patients upfront. Offering flexible payment plans or online payment portals can ease the burden on patients and help you collect payments faster.
For more insights on maintaining an effective collections process, check out our article on How to Reduce Your Out-of-Control Insurance AR, which includes strategies that can help streamline both insurance and patient collections.
6. Update Your Billing and Coding Processes
Q4 is an excellent time to review your coding and billing processes for accuracy and compliance. Prepare for any changes to codes or regulations, such as updates to the 2025 CMS Proposed Rule or adjustments to key dermatology billing codes. Ensuring that your billing processes are up-to-date will help prevent errors and avoid costly claim denials.
7. Invest in Staff Training
The end of the year is a great time to invest in staff training. Ensure your team is current with the latest billing, coding, and compliance changes. Consider offering training sessions or webinars in Q4 to give your staff a head start on the new year. Well-trained staff are essential for smooth billing operations and timely claim submissions.
How We Can Help
At Inga Ellzey Billing Companies, we understand the complexities of dermatology billing and the challenges of managing financial cycles. Our services extend beyond billing and coding; we work alongside your practice to streamline operations, optimize cash flow, and ensure financial soundness as you move into the new year. Whether you need assistance with building a more efficient billing process, reviewing expenses, or managing accounts receivable, our expert team is here to help.
Free Consultation
Want to see how we can help your practice succeed in 2025? Schedule a free consultation with one of our experts to receive a personalized practice review.
