Sites: Make Financial Audits Work for You
Are you like too many other clinical trial sites? Not getting paid what you think you’re owed, getting checks that you can’t tie to a study or spending too much time resubmitting invoices?
Then you should think about conducting regular financial audits, says David Russell, director of site strategy at PFS Clinical. “Sponsors and CROs are typically not going to remind you to send them invoices or to request the funds that you’ve already agreed to.”
And while it may seem like a lot of work, conducting financial audits can “reap very large rewards in making sure that everything is collected,” Russell told a CenterWatch webinar.
In his experience, payments are made on time and in accordance with the CTA only about 72 percent of the time. And even when they’re paid on time, they often aren’t accurate. “Only about 70 percent of payments are actually paid correctly. That’s a high number, but that means three out of every 10 invoices that you send in, or visit checks that you’re seeing, are inaccurate.”
“This is not saying that sponsors or CROs intentionally are paying inaccurately. Oftentimes I think they’re doing the best that they can. All I can say is, look at it from their perspective. As a sponsor, as a CRO, if there a study that’s going on, and we’ll just generalize and say it’s at 40 sites, what that typically means is that there’s 40 different CTAs, 40 different budgets, 40 different payment terms,” Russell said.
To explain the value of a financial audit, Russell talked about a site he worked with that had 600 open studies. Out of the 600 studies Russell audited 12. “What we found was a little over $75,000 was not even invoiced. And there was $31,000 that was invoiced but it wasn’t collected,” he said.
“So there was a total of $106,000 that was owed to the sites from those 12 studies. So it averages about $8,852 per study that is owed,” he said.
A second site had 250 studies and he chose only five studies to audit. “A little over $102,000 was not invoiced and nearly $34,000 was invoiced but not collected,” he said. “This averaged actually $27,174 per study,” he said.
Russell has some dos and don’ts:
- Conduct routine financial audits;
- Understand the payment terms for your studies;
- Maintain a reconciliation log to tie out all payments;
- Assure you are keeping up with all invoiceable items.
- Assume your CTMS will accurately track your receivables;
- Entrust the receivables management process to a study coordinator;
- Assume that the sponsor/CRO will pay you correctly;
- Presume that if you send an invoice you will be paid;
- Wait too long after your close-out visit to complete the final reconciliation.