Some physicians charge deposits to curb no-shows

A column about keeping your practice in good health

By Karen Caffarinicovered practice management issues during 2008-09 and writes for us occasionally on the topic. Posted June 2, 2008.

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Many practices tell patients they have to pay a fee if they miss an appointment without notice. But a small number of physicians are taking a more up-front approach -- making patients reserve their slots with an appointment deposit that is cashed in case of a no-show.

The result, the physicians say, has been patients who are more faithful about showing up, or at least giving notice if they can't. And the fewer empty slots has meant more practice revenue, the doctors say.

Physicians who charge deposits, which range from $10 to half the cost of the scheduled procedure, emphasize that the primary goal is to cut down on missed appointments, not to make additional money through cashing deposits. "We have to train our patients to show for their appointments," said Suzanne Bruce, MD, a dermatologist from Houston.

The average no-show rate for medical offices is 5% to 7%, according to informal research conducted by Medical Group Management Assn.

That rate can be higher if the office has a larger percentage of new, Medicare or self-pay patients, according to a study published in the November-December 2007 Annals of Family Medicine. Every missed appointment, of course, means wasted time for the physician and a missed opportunity for another patient.

Medical offices have tried various means to whittle down their no-shows. According to a 2007 MGMA report, 26.8% use an automated phone reminder system, 4.6% schedule patients who skip appointments for downtime, and 6.1% charge a percentage of the appointment fee. Others overbook, figuring a certain percentage of patients won't show.

Physicians who charge appointment deposits say these other methods did not work for them.

They found it impossible to collect the missed-appointment fee, especially from new patients. Overbooking isn't always practical and upsets patients who face longer waits to see the physician. "It's pretty hard to overbook when you see five to six patients in one day at more than an hour each," said Theodore Friedman, MD, PhD, chief of endocrinology at Charles Drew University of Medicine and Science in Los Angeles.

Under the deposit plan, physicians charge patients a fee -- payable by credit card, check or an online PayPal account -- when they schedule an appointment.

If the patient keeps the appointment, the deposit is either dropped or applied to the cost of the visit. If the patient misses the appointment, he or she loses the deposit. The deposit generally will be waived in the event of a true emergency, or if the patient gives ample notice that he or she would not be able to make the appointment -- usually 24 to 48 hours.

Proponents say appointment deposits have been effective in reducing the number of no-shows and weeding out patients who are not really committed to seeing the physician.

But some doctors contacted by AMNews questioned the ethics of such a policy. And they wondered if the physician instituting the fee is risking alienating patients with the implication that they can't be trusted to show up.

The American Medical Association does not have specific policy addressing appointment deposits. But AMA policy does allow a physician to charge a patient for a missed appointment, or for one not cancelled 24 hours in advance, provided the patient has been advised of the charge.

Physicians who favor the deposit fee say it can be implemented without angering patients or treading into unethical territory, provided certain precautionary steps are taken. They advise:

  • Be up front about your fees so there will be no surprises for your patients. Dr. Friedman encourages his patients to make their appointment online, where they can see his charges and policies first.
  • Be up front with other physicians who refer patients to you, so they can decide whether they want to recommend a physician who charges the appointment deposit. Some referring physicians might want a waiver for their patients.
  • Explain the idea behind the deposit to your patients. On her Web site, Dr. Bruce emphasizes that her aim is to open otherwise unused appointments for her patients, not to collect missed appointment fees.
  • Make sure patients are aware that the deposit cannot be billed to insurance companies or Medicare. Medicare allows physicians to charge patients for not showing for their appointment, but will not pay the fee.
  • Be willing to give refunds if the patient has a legitimate reason for missing an appointment. But be clear how you define "legitimate."
  • Remind patients of their appointment a couple of days in advance. Many offices use an automated phone system.
  • Be prepared to terminate patients who continue to miss appointments.

Steven Hopping, MD, president of the American Academy of Cosmetic Surgery, said while the academy doesn't make any recommendations regarding fees, he believes the deposits are good business practice. "People think more seriously about a procedure, get more questions answered, if they put money down."

Added Dr. Bruce, "A massage therapist charges full price if you don't show up. Hotels do it, and so do other businesses. I feel justified charging the appointment fee."

Karen Caffarini covered practice management issues during 2008-09 and writes for us occasionally on the topic.

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