Physicians engage in clinical research for many reasons. Benefits include raising personal or practice profiles, gaining access to investigational treatments, offering patients the option of participating in research, and increasing revenue. But to profit as an investigative site, a physician practice must also successfully manage the business side of research.
Timeliness of site payments is a significant part of the business equation. For a variety of reasons, physician practices may receive payments many months after services are rendered and/or fail to collect all the money they are owed. Surveys have shown that 40% of global investigators considered slow payment from sponsors to be one of their greatest burdens. In 2017, the average delay between a CTMS-reported event and corresponding sponsor payment was 154 days. Further, 66% of sites reported having less than three months’ operating cash on hand.
Clearly, this financial situation is unsustainable for sites. In specialties with investigator shortages, such as nephrology, it indirectly affects sponsors as well. Fortunately, there are many steps that sites and sponsors can take, both individually and together, to make the payment process more efficient.
Idiosyncrasies of Traditional Research Billing
Certain peculiarities of traditional research billing explain why some investigative sites have cash flow issues. These billing practices are so unlike those of standard medical billing that reliance on the practice administration to fulfill this task may not make sense. Features include:
- It’s a buy first, pay later system.
- Payment, while sometimes more frequent, is often quarterly.
- There may be no payment for patients who fail screening, despite the time invested — an increasingly significant problem as trial acceptance criteria becomes more and more exclusive.
- Sponsors may hold back a percentage of fees pending approval of services rendered — which may not occur until data is locked, study wide. According to a Society for Clinical Research Sites (SCRS) survey, the 2016 average hold-back was 12%.
- Penalties for late sponsor payments, when they exist, are rarely enforced.
- Reporting errors or tardiness and query resolution often delay payments.
- Sometimes payments arrive with no documentation regarding what the payment covers.
- While payments are sometimes triggered by data entry into an EDC system, billing is often not fully automated.
- Sites have no visibility into payment progress, while payment timing is unpredictable.
By updating some of these billing practices and streamlining finances through built-in efficiencies that support record-keeping and invoicing, sponsors and investigators can work together to alleviate sites’ financial woes.
Front-End Preparation Can Set New Payment Expectations: Optimize the Clinical Trial Agreement
Aligning expectations and promoting transparency are easiest to accomplish before a trial begins.
By enlisting the help of a team experienced in negotiating clinical trial agreements (CTA) and budgets (included with Frenova’s site management services, for example) sites are better able to estimate a defendable market value for their services, negotiate appropriate compensation, and avoid under-budgeting. Expert assistance in protocol optimization is another opportunity to ensure sites become profitable as quickly as possible, since participation requirements influence enrollment and enrollment influences profitability.
Sponsors should be motivated to build trust with investigators, since how quickly a sponsor paid their bills in the past and the sponsor’s reputation for doing so likely affect investigator decisions regarding participation in specific trials. To arrive at mutually beneficial terms, both sponsor and investigator teams should think about the above list.
For example, net 30 payment is standard throughout the business world. Why not make it standard in clinical research? Also, could the sponsor make an initiation payment to cover study start-up fees and help with cash-flow as the site sets up for the trial? Could billing and payments be handled electronically, including a mechanism for progress visibility? What about ensuring compensation for time spent on would-be recruits who fail screening? Are hold-backs really necessary?
Delineating clear procedures for query resolution, with a person to contact for further action, will help avoid major delays in the case of errors. Specifying a standard format for payment documentation will ensure that sites don’t waste time trying to determine what has and hasn’t been covered. All these considerations present opportunities for shortening payment timelines.
Back-End Vigilance Ensures Accountability
Investigative sites can increase the likelihood of adequate and timely reimbursement through exemplary accounting practices.
Technology Is a Necessity
No one should still be recording clinical trial activities in spreadsheets. A good clinical trial management system is non-negotiable for tracking and reporting on studies, patients, and billable events.
To Record and Bill Compulsively, Outsourcing Can Help
Because only 70% of payments are related to patient visits, other billable activities must be carefully logged and invoiced. Recording all treatments and observations and billing appropriately is a significant burden for investigational sites — and must be done promptly and meticulously for timely reimbursement and to avoid one of the root causes of payment issues: erroneous invoicing. Enlisting expert help may be a worthwhile investment. Site management services like Frenova’s can help save sites time while improving ROI by ensuring all billable events are recorded accurately and promptly invoiced.
Accounts Receivable Must Be Reconciled
We have evaluated sites that were paid thousands of dollars less than they were owed — and never noticed. A sure system for auditing and reconciling accounts receivable is essential to ensure good ROI.
When Necessary, Payment Must Be Pursued
When receivables are tardy, prompt follow-up is required. Site management specialists know when bills are due, how to troubleshoot if they aren’t paid, and take responsibility for ensuring prompt resolution.
Knowing Costs Now Helps Estimate Other Costs Later
To know whether reimbursements are reasonable or sufficient, investigative sites must track their own costs carefully. Increasing protocol complexity — more processes to follow, more documentation — makes it increasingly difficult to gauge expenses. Sites need to know their costs, current and historic, to negotiate for what they will need.
Some fields of clinical research, such as nephrology, need more principal investigators. However, site cash-flow difficulties threaten studies and challenge site sustainability in numerous ways, from interrupting patient reimbursements to forcing investigators to give up research — a loss the industry can ill afford.
Fortunately, a strategic approach to ensuring timely and complete reimbursements can help. The stage must be set with clear and fair terms in a mutually beneficial clinical trial agreement. Use of technology and other organizational means will streamline financial operations and ensure that billing is prompt, complete, and error free. Careful reconciliation of accounts will help ascertain that full payment has been received. Missing payments must be pursued until received.
One efficient and cost-effective strategy is to obtain outside clinical research support to oversee all investigational site finances and clinical trial activities and to improve overall efficiency. By enlisting these services, investigators gain help with budgeting and contract negotiations, accounting, record keeping and reporting, streamlining study startup and patient recruitment, and following up on payments that are unaccounted for — all tasks that will help sites receive sponsor payments sooner.