How to Improve your Practice’s Accounts Receivable Process?

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Keeping a high priority on sales, businesses frequently fall into the trap of extending credit to customers. By offering discounts and neglecting payment terms, they oftentimes, end up soliciting heavy outstanding and dues collection.

Instead of winning new sales, they draw out new debts!

And many times practices overlook maximizing collections and they risk losing out on much-needed revenue.

Such scenarios are quite evident in the healthcare segment where medical practices unintentionally end up carrying overdue accounts receivable (AR) that often produces a ripple effect that virtually touches every aspect of running your practice.

Accounts Receivable, in General

Accounts Receivable are your organization’s outstanding invoices owed by customers. If we go understanding these two terms separately, it simply implies that AR is the “Accounts” that your business has a right to “Receive” in return for the rendered products or services to the clients/customers.

Ideally, all invoices must be paid timely, however, this is never the case where a majority of the healthcare enterprises (big and even small) carry low reimbursements rates and are capital-stuck in the accounts receivable.

“Healthy Accounts Receivable can favorably impact your business’s bottom line.”

An important point about accounts receivable is that they are an opportunity to increase the business prospects of a healthcare firm since it helps to maintain patient relationships and generate income for the institution.

Typical causes for Accounts Receivable(AR) Lags

#Bad Debts

It’s one of the most common reasons where rising out-of-pocket costs deter patient’s responsibilities and affect more than one-quarter revenue of the healthcare industry. Patients who are unable to pay their bills land up into bad debts that further make the payment collection process more critical.

#Unwarranted Write-Offs

There are some necessary write-offs but many are those that lead to high AR. Usually, it happens that the AR management team neglects to keep track of the payments that are less in the amount which turns write-offs accumulate to a larger net loss.

If a practice lacks such a procedure for write-offs then certainly it will affect your balance sheets and collections.

#Insurance Claim Denial

One of the most prevalent reasons for increased AR days is claim denials where the maximum sum is expected to be received from the insurance companies.

A minor mistake or negligence on part of the processing data (like missing or inaccurate information, coding errors, duplicate submissions, late filing, etc.) occurs claims to be either denied or rejected which further reasons to interruption in the cash flow.  

Thus, a halt in the claims processing ultimately ties up too much working capital on the balance sheet.

[Prefer Reading: Charge Capture & its Best Practices to Implement at Your Practice

#Lack of Account Receivable Management & Collection Culture

If your medical institute is witnessing financial loss due to bad debts, poor patient experience, then you need to check on your AR management and the collection procedures they follow or rely on.

Professionals working in the Revenue Cycle Management need to provide quality service to maintain a successful practice and continue to provide care. Lack of tools to collect unpaid balances can get you on the losing side of maintaining a healthy revenue cycle.

Best Practices to Apply to Improve Accounts Receivable Process

#Prioritize Credit Management

Orchestrating over the credits is highly essential to witness a running revenue cycle. Strictly maintain and adhere to credit policies without unnecessarily extending credits just for plugging sales.

As already mentioned, targeting new sales while ignoring payments and credit terms backfires over the long haul and gets you stagnant with hefty outstanding and dues. 

#Regular Follow-Up with Outstanding Accounts

Stay on top of available cash flow by reviewing your accounts receivable weekly. You can identify roadblocks in your debt collection system that require adjustments. You may need to shorten your payment deadlines or start asking for cash payments

#Examine Claims Closely

Errors incurred from claims keep a high potential to expand the AR days. So they must be examined closely for accuracy and completeness. Claims must be submitted carefully to avoid chances of rework and resubmissions, one can make the best use of claim scrubbing tools to catch probable errors.

#Eliminate Billing Conspiracies via a Streamlined Process

Different characteristic billing disputes may directly or indirectly shake the cash flow funnel. This requires your establishing specific rules and guidelines to handle exceptions and billing conspiracies.

This will closely impact patient experience and employee performance as the team will know the dynamics to handle disputes while working as per a streamlined process.

Disputes can be unpleasant, but they won’t go away on their own. Everyone on your team should be aware of the procedures to comply with your company’s credit policy and to earn high patient contentment.

#Enforce Automation

Automation is the need of the hour. To eliminate inaccuracies, void manual errors, accelerate ROI, it’s essentially obligatory to implement software tools and bots that help to keep you financially viable.

The more you can remove the human element the more accurate and reliable the payment lifecycle would be that would keep your accounts receivable light and dues-free.

NetSet’s Investment in Innovation and Intelligent Automation captures exponential revenue benefits for a medical practice, seeking to outperform its operational and administrative tasks with quality results.

[Prefer Reading: Alleviate your Medical Practice’s Operational Challenges via RPA Implementation]

#Establish a Proactive Collection Process

At the end of the day, it’s all about collecting a recognizable amount of money for the services offered. Thus a clear, concise, and effective revenue collection strategy must be implemented, say, if an account slips into the past-due section, it must be handled on utmost priority recognizing the reasons for delayed payment using your established guidelines.

#Bill Electronically

Make a digital transition and shift your RCM and medical billing procedures to be processed electronically and effortlessly while supporting digital invoices and payments. The fewer invoices you have to mail and paper checks that you have to process, the smoother and more accurate the entire process will be, thus, reducing AR days.

[Prefer Reading: Care-on-Demand: A Visible Approach to Digitize Patient Intake Process]

#Outsource Billing

To let a reliable partner manage all your billing grunt work, outsource a medical reimbursement company, and outsource the entire RCM process that would help you relieve your stress and manage your accounts receivable.

Outsourced billing companies code and examine your claims for error, follow-up with denials, automate manual procedures, increased cash flow with accelerated financial growth, thus deriving expected revenue outcomes.

[Prefer Reading: Benefits of Outsourcing Revenue Cycle Management (RCM)]

We Can Help Modify your Dreams & Magnify your Practice’s Results!

Do you feel these pains?

-Manual reminders and dunning

-Sorting and chasing data for extracting accurate status of the claims

-Constant influx of invoices, documentation, and billing statements

-Stagnant revenue collection

We help you eliminate the hurdles coming across your collections process and ensure your business stays on top of cash flow.

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