Patient Cancellations Drain Your Cash Flow

Feb 11 | , , ,


How to stop the drain in lost revenue

Carol A. Wilcox

 PREFERRED Therapy Providers, Inc.

Do you want to improve cash flow for your healthcare practice? Wondering how much revenue you’re losing each month from no-shows and cancellations? According to this resource missed appointments cost the U.S. healthcare system $150 billion each year. A study in 2016 found that the average annual patient cancellations and no-shows for healthcare practices both large and small and in every type of specialty was nearly 20%.

Not convinced? Add up all the cancellations and no-shows your practice had in the last year. For exampleif you have 400 cancellations and no-shows in a year with an average treatment rate of $130.00 per visit; that would equal $52,000 in lost revenue. If you have an appointment cancellation policy with a $50 fee for last minute cancellations or no-shows, but you didn’t enforce the policy, you would have lost an additional $20,000. That’s potentially a total of $72,000 in lost revenue for your business in one year.


The first place to check for causes is your own clinic operations. Determine if cancellations and no-shows are related to how you run your practice. Patients who experience consistently long wait times in your practice may feel their time is far more valuable than sitting for prolonged times in your waiting room. This resource points out a survey that found 97% of patients surveyed were frustrated by the length of wait times in a healthcare office. If you frequently reschedule patient appointments or tend to have long wait times, the problem may be with your clinic operations. If you or members of your staff are curt with patients, don’t make eye contact or quickly acknowledge them, it may be perceived as a sign of disrespect. Take the time to review processes and procedures within your own organization and correct any areas that may be cause for concern.

There are a lot of demands on everyone’s time. It can be easy for someone to forget an appointment or something happens at the last minute that requires a cancellation. Other reasons why patients may cancel an appointment or simply not show up can include financial concerns, fear, lack of reliable transportation or even lack of common courtesy. Understanding the different reasons why patients may cancel an appointment will help you and your staff to formulate the best cancellation policy for your practice.


Simply put, your time as a healthcare professional is valuable and it costs money to keep the lights on. Patient cancellations and no-shows can put a drain on your cash flow. Although you will always experience a percentage of cancellations and no-shows in your practice, you can significantly reduce that potential lost revenue by implementing a cancellation policy and educating your patients on the value you provide and how the policy is enforced.

Many healthcare practices have a standard cancellation/no-show policy that is similar to this:

Set a time limit for patients who arrive late – If a patient is over 30 minutes late for their appointment, inform them that they will have to reschedule. Require a 24-hour advance cancellation notice. Anything less than 24 hours should be considered a late cancellation.

Late cancellation fees – First time is a courtesy reschedule. Second late cancellation will incur a $50.00 cancellation fee billed to the patient’s account. Third late cancellation will incur a $50.00 cancellation fee billed to the patient’s account with the option of discharging the patient.

No -shows – A patient is considered a no-show if they miss an appointment and do not call to cancel it.

Missed appointment fees – First missed appointment will incur a $100.00 deposit to reschedule the appointment, refundable once the appointment has been kept. Second missed appointment will incur a $50.00 missed appointment fee billed to the patient’s account. Third missed appointment will incur a $50.00 missed appointment fee billed to the patient’s account with the option of discharging the patient.


Concerned that a cancellation/no-show policy may turn-off patients? Chances are, a lot of your colleagues feel that way, too and therefore never enforce a policy and never recoup the revenue that is lost, but there are several ways to circumvent this:

Customize your policy to reflect your patient base – One size does not fit all. Make sure your policy fits your patient demographic.

Be upfront about the policy – at the time the first appointment is made, be clear about your cancellation/no-show policy. Here’s an example: Our providers set aside a specific amount of time to devote to treating you. Therefore, out of respect for their time and the needs of other patients, and to avoid a late cancellation/no-show fee, we require the courtesy of a 24 hour advance notice if you need to cancel.

Communicate your policy – This is an important step and should not be skipped. Be sure to include your policy on your website, on patient intake forms (where the policy should be spelled out, acknowledged and signed by the patient), when setting up patient appointments by phone, and on marketing collateral such as brochures. If this is a new policy for your practice, consider giving existing patients a 30-day “grace period” before enforcing the policy. Patients don’t like surprises so documenting and communicating your policy is crucial.

Provide specific instructions on how to cancel an appointment. For example, if a patient calls to cancel, can they leave a voicemail if you’re not in the office? Here’s an example: If you need to cancel an appointment, please contact us by telephone at [your number]. If we are unavailable to take your call, please leave a voicemail with a detailed message. If you would like to reschedule your appointment, please leave a contact number so we can call you.

Send appointment reminders – In 2017, this nonprofit organization surveyed patients and found that 52.4% of patients who missed an appointment did so because they forgot, 28.6% incorrectly noted the time and 23.8% cited other reasons such as traffic, schedule conflicts and work related delays.

Sending consistent and well-timed appointment confirmations and reminders is not only convenient for patients, but can significantly reduce cancellations and no-shows. Instead of making reminder phone calls which can tie up valuable staff time, many healthcare practices utilize an automated service to manage confirmations and reminders. Do a Google search using the term: HIPAA Compliant Automated Appointment Reminder to find companies that provide this service.


Check with colleagues to see what their policies look like. Or check other healthcare provider websites using the Google search term: Cancellation Policies for Physical Therapy. Your search should yield an abundance of cancellation policies online. If you’re not a physical therapy practice, replace the search term, Physical Therapy with your own healthcare specialty to find cancellation policy examples for your practice area.

About the Author:

Carol A. Wilcox is the staff writer and head of marketing communications at PREFERRED Therapy Providers, Inc. You can reach Carol here.

This article is brought to you by PREFERRED Therapy Providers Inc. PREFERRED is the nation’s leading payor management services network. Our expertise is working with physical, occupational and speech therapy practices – from single clinics to multiple clinic locations.