Across healthcare, operating expenses have been climbing faster than revenues for more than a decade, creating margin pressures that have squeezed small and independent practices especially hard. With payer reimbursement remaining stagnant or falling and operational expenditures continuing to rise, targeted cost containment is necessary for operational sustainability.
When every dollar counts, minimizing cost-to-collect can have a major impact on a practice’s overall operating costs. The average independent practice spends three to seven percent of its annual revenue on billing and collections. This figure increases to 10.9% for solo practitioners. And practices that improve their billing operations consistently report stronger margins than their peers.
Inaccurate billing or outdated payment systems take time and attention away from what matters most—patient care. In contrast, when payment processes are efficient, a larger share of every dollar collected falls to the bottom line. Minimizing outstanding accounts receivable (AR) improves cash flow and liquidity, reducing financial risk. Streamlining payments also reduces administrative overhead, while providing both patients and staff with a better experience.
“If you think of it in terms of per-transaction cost or flat monthly fee, practice owners usually know what it costs to collect each payment,” says Misty Meraz, Vice President of Healthcare and Public Sector Sales at Elavon, Inc. “But when you begin to think of it more holistically, billing and payments become more complicated. The lost cash flow and higher administrative expenses associated with outstanding accounts receivable add up quickly, as do labor costs if manual workflows are time-consuming. Yet other expenses can be more difficult to quantify: How do you put a price on employee frustration? Or HIPAA compliance risk?”
Four often-overlooked ways modernizing billing can improve a practice’s financial health:
Healthcare payments are inherently complex because practices must process transactions from individual patients as well as multiple different health plans. With a growing percentage of healthcare costs falling to patients, though, it’s imperative for practices to make collecting payments convenient and efficient.
Here are four ways—going beyond per-transaction cost-to-collect—that efficient billing can boost the financial health of a medical practice:
#1: Collect earlier
Steady, predictable cash flow is critical for maintaining viable operations. The sooner payments arrive, the better cash inflow can match ongoing expenses like rent, payroll, and supplies. Collecting at or near the time of service means that fewer patient balances will age, require reminders, or need to be handed off to collections agencies. And when collections are timely, the practice will have more cash on hand, which can be reinvested in technology upgrades, staff development, or other initiatives that enhance care quality.
Offering convenient digital payment options makes it easy for patients to pay promptly. When it’s effortless for patients to use the payment methods they prefer (e.g., in-office terminals, an online portal, pay-by-text, mobile wallets, etc.), a larger percentage will pay in full right away. Practices that offer recurring payment options will see fewer defaults, especially when combined with tailored communications and the option to automatically charge a card on file.
#2: Streamline front-desk operations
Not only do outdated payment processes with time-consuming manual steps increase operational overhead and frustration, but they also consume valuable labor hours that could otherwise be dedicated to enhancing patient care and experiences.
If medical payment processing systems aren’t directly integrated with electronic health record (EHR) and practice management software (PMS), staff members will spend hours manually reconciling ledger entries. Switching between dashboards increases the effort involved; it also increases the chances of error.
Automated payment posting reduces manual effort and mistakes. Appointment check-in is faster, and it’s easier to collect balances and copays. Staff will spend less time following up with patients about outstanding balances, mailing out paper statements or manually updating payment records.
#3: Improve patient satisfaction
Today’s patients expect the same degree of convenience, transparency, and choice from medical practices that they’ve grown accustomed to in their interactions with banks, retailers, and e-commerce businesses. Integrated payment solutions that are flexible and secure go a long way toward meeting these expectations.
Ideally, a medical practice should accept all major credit and debit cards as well as digital wallets like Apple Pay and Google Pay. It should be able to store payment card details to simplify post-visit and recurring payments, and should allow patients to pay bills anytime, on any device, via a secure online portal. Offering these capabilities can improve patient satisfaction and engagement, which often translates into increased long-term retention and practice growth.
#4: Reduce compliance risk
The Office for Civil Rights (OCR) ramped up HIPAA enforcement for small practices in 2025, with imposed fines exceeding $10 million in just the first half of the year. Not knowing about a violation is no excuse, though fines for violations that covered entities were unaware of are considerably smaller than those imposed for willful neglect. Still, the financial risks are major. Medical practices can’t afford to take chances with personally-identifiable information (PII) belonging to their patients.
All payment card processing systems must be PCI DSS-compliant, but those used in healthcare should also provide robust point-to-point encryption (P2PE) for all PII (including patient names and address information), as well as tokenization to further protect patient privacy. A payments solution provider that is HITRUST certified will have the needed capabilities. If the payments provider has extensive experience in the healthcare space, they will be very familiar with the standards for documenting compliance in healthcare.
Fewer medical professionals are in private practice than ever before, with financial challenges driving the shift. As Meraz points out, making billing simpler and easier for both patients and staff can help turn the tide. “Burnout is everywhere in healthcare today,” she says. “It’s a problem for administrative professionals as well as clinicians. A modern payments solution can save time and increase efficiency for staff while improving the practice’s profitability. This is a win for everyone involved, and these kinds of wins make it possible for small practices to stay independent.”
Elavon Business Solutions makes payments simpler for small and specialty practices. Learn more about Elavon and what these plans could mean for your practice.
