Running a small healthcare practice is a balancing act between a shorter AR cycle and higher patient collection. As you are committed to offering quality care to patients, it is also very important to manage the financial sustainability of the medical facility. This is where Accounts Receivable (AR) recovery becomes significant.
Overdue payments pose a cash flow problem that can rapidly get out of control, causing you to lack the essential resources needed to invest in your practice. This could ultimately affect the quality of your patient care. The good news? You can take control.
This guide will equip you with the knowledge and strategies to boost cash flow through AR optimization, ensuring your practice remains financially healthy and allowing you to focus on what matters most: patients’ health outcomes.
Understanding Accounts Receivable in Healthcare
AR is an abbreviation for accounts receivable—the invoices or reimbursement owed to a healthcare practice by patients and insurers for provided services. The AR process begins with issuing bills to patients and then sending claims to insurance departments. It does follow people`s claims from filing them to reviewing, adjudicating, and receiving a payment, respectively. It is of paramount importance to gain insight into each stage of the AR cycle in order to identify any delays and expedite the speed of collections.
Also Read: Minimize Claim Denials in Your Pain Management Practice
Key Performance Indicators for AR Management
For healthcare RCM, age-based AR stats are the primary KPIs that you use to check the performance of your AR. Through these categories, healthcare providers can monitor how long payments have been in the pending stage, thus alerting you to any potential problem areas. Here’s a breakdown of some important age-based AR categories and how they can be used:
Current (0–30 days)
This category strives to achieve the optimal scenario: when payment arrives within payment terms and you agree. A high figure here indicates that invoicing and collection procedures are smooth and effective.
Early Delinquent (31–60 days)
This category is for the bills that are overdue, but not interference with liquidity at this point. Nonetheless, it’s the right time to take measures, like surface-friendly hints about the due date.
Late Delinquent (61–90 days)
Payments within this category demand more of our time. An increase in the frequency of communication and perhaps the offering of flexible payment methods may be necessary.
Bad Debt (Over 90 Days)
The last one, mainly including the claims that are hard to collect from the debtors, this depiction represents the doubtful pay-back. A high score here refers to the fact that you have to reconsider your assessment of creditworthiness during admission of the patient or improve your collection of technological instruments.
Though age-segmented statistics are a good way of looking into the problem of addressing AR metrics, using a comprehensive approach is more appropriate.
Here are some additional metrics to consider:
Days Sales Outstanding (DSO)
This KPI presents the average days of the open AR balance in relation to the services that have been rendered. A low DSO is an indicator of timely collections and good cash flow.
Collection Rate
This ratio will determine the percentage of the total billed charges that get collected through successful collection. A high collection rate shows us that the AR collection process is effective.
Write-off Ratio
This KPI shows the number of receivables that are considered doubtful and written off. A low write-off ratio stands for the success of the collecting activity.
Practical Strategies for Small Practices to Recover AR
Here are some actionable strategies to boost your AR recovery and ensure timely payments for your small medical practice:
Early Intervention is Key
Develop a program for early intervention, for instance, by regularly sending out emails, texts, or phone calls within a day after the due date for the payment. A gentle reminder is sometimes all you need to make a patient find their long-lost memory of paying their hospital bill.
Embrace Automation
Utilize digital tools for invoice processing and electronic money transactions. This helps to keep the process straightforward, decreases the risk of human errors, and gives your staff the needed time. Through the use of automated systems, hospitals can send invoices and reminders to patients who can settle their bills by themselves.
Effective Follow-up is Essential
Outline a coherent communication plan that would keep the focus on unpaid balances. Teach your staff to be cordial, polite, and understanding. Also, stress the fact that payments should be made on time for the seamless functioning of your office. An option in communication tools such as phone, e-mail, or text might be provided in order to accommodate the patient’s specific interests.
Transparency through EHR Systems
The AR recovery can offer a lot of profit because of the modern EHR system. The systems are designed in such a way as to link patients to view their statements and pay their balances all through their patient portal on secure online platforms. This clarity helps patients have a better grasp of their financial responsibilities. This results in quicker settlements.
Incentivize On-Time Payments
Give yourself the option of offering early payment discounts or payment plans to help patients pay their dues right away. Upfront discounts for early payment set the bar high for clients to show the ability to make timely payments, while the installment plans are tailored for those who may need gradual budgeting.
Prioritize Payment Security
Offer an online payment portal where patients can safely transact their payments, and their information will be safe from internet theft. Implement up-to-date security measures and eliminate all doubts regarding the protection of your users information.
Offer Multiple Payment Options
Enhance the patient experience by providing an option for them to choose the payment model. This could be those credit cards, debit cards, or checks, and of course, the online payment services, which are also extensively used. In order to make it easier for the patients to get their bill paid, one can offer them convenience, which in turn will ensure that their bills are settled on time.
Leverage data for AR Optimization
Be no fool and overlook the art of data analytics. Leverage the information produced by your RCM system to develop strategies and find room for improvement. Explore the causes of denials, delays in payments, and write-offs. This information helps you add targeted strategies that are aimed at solving the most important areas.
By using these strategic actions, you would be able to reap a considerable income and enjoy a steady return. This will set you free from distress; you will deal with one concern at a time instead of having all of them connected to money problems.
Conclusion
In a nutshell, administering accounts receivable well is no longer a luxury but rather a dire need for small medical practices. A lack of payments collected can significantly limit the financial aspect of delivering high-quality care, making it difficult to invest in new technology as well as bring in the best workers. Using strategies such as early intervention and automation has led to discussions leading to a data-driven collection that would enable you to do better in accounts receivable recovery.
While using these strategies may significantly increase AR recovery, you may have to consider outsourcing the medical billing to a professional company such as Medheave, which could be a strategic decision.
Concentrate on patient care and allow Medheave to handle the other technicalities. Contact us for further details.
