A strong accounts receivable (AR) procedure is essential for businesses in any industry, and healthcare is no exception. In fact, because healthcare businesses confront so many specific issues when it comes to billing, effectively managing accounts receivable is vital to their success.
We’ll go over all of the complexities of medical AR in this article, including frequent obstacles, tried-and-true best practises, and how the appropriate automated solution may drastically improve the management process.
When healthcare professionals bill a patient or their insurance company, the AR cycle begins. Despite the fact that they show money due, ARs are not assets. Accounts receivable are often classified by their age by providers:
- 1-30 days
- 31-60 days
- 61-90 days
- 91-120 days
The Consequences of Revenue Leakage
Excessive income leakage is a serious threat to healthcare providers in the United States. Many hospitals currently have negative margins that are hundreds of millions of dollars below their revenue. 2 Rural hospitals are shutting at a faster rate than they have been since 2005. 3
According to a Fibroblast poll of healthcare C-suite executives conducted in 2018, approximately 40% of respondents’ firms lose 10% or more through leakage. Perhaps more alarming is the fact that 23% of respondents have no idea how much money their companies lose due to leakage. 4 Providers cannot afford to lose revenue for long periods of time.
Revenue Cycle Management (RCM)
The shorter revenue cycle begins with patient registration and scheduling their first appointment, whereas the longer revenue cycle begins with billing. The revenue cycle comes to a close with the AR cycle. Issues that arise at any point during the revenue cycle, even as early as gathering personal and insurance information from patients, jeopardise the success of both.
Revenue cycle management (RCM) aims to streamline the process, identify areas for improvement, and reduce the likelihood of errors. RCM necessitates continuing participation, and advanced attempts may include the use of data analytics.
How to Reduce Days in Accounts Receivable
Many medical providers find that evaluating their systems is one of the simplest ways to enhance their accounts receivable. ARs gather, age, and turn into revenue leakage when process inefficiencies and oversights go unchecked.
Contact us today to partner with our team of dedicated AR and RCM specialists.
