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Accounts receivable in healthcare refers to the reimbursement that you, as a healthcare provider or medical practice, are owed for care and services rendered to patients. To run a successful healthcare facility and encourage a healthy cash flow, you need to effectively manage accounts receivable and work to receive the maximum reimbursement possible.
However, before diving into how to improve your accounts receivable system, you need to know how the process works. An accounts receivable timeline typically looks like this:
- Filing claims to the insurance provider
- Tracking claim status
- Identifying and analyzing the causes of claim denials
- Following up on denied claims
- Refiling corrected claims to the insurance provider
- Monitoring the status of claims until you receive payment
Why You Need to Improve Your Accounts Receivable System
You need to have an effective accounts receivable system in order to avoid delays, denials, and partial reimbursements. All of these can significantly impact your cash flow and revenue cycle management.
Accounts receivable typically have diminishing returns—the longer an account goes unpaid, the less likely your practice will receive full reimbursement for your products or services. For example, if an account receivable goes unpaid for more than 120 days, your practice can expect mere cents for every dollar owed. Because of these diminishing returns, it’s essential that you maintain an up-to-date accounts receivable system that prioritizes speed and accuracy in filing and work to avoid costly financial hiccups.
Does your healthcare organization struggle to resolve accounts receivable? Check out our blog to learn how you can prevent late patient payments and improve your revenue cycle.
Your Comprehensive Accounting System Upgrade Checklist
Here are seven ways you can upgrade your accounts receivable system.
1. Communicate openly with patients.
Before you deliver your medical services, make sure your patients are fully aware of your payment terms. By informing your patients and setting financial expectations ahead of time, you can significantly reduce the number of delayed or delinquent payments. Ultimately, this improves cash flow and increases revenue.
Consider providing your patients with a detailed document that outlines their financial responsibilities regarding your services.
2. Follow up on outstanding accounts regularly.
Even if your patients are fully aware of their financial obligations, you’ll still likely deal with late payments or delinquent accounts. Reach out to your patients frequently regarding their accounts to ensure you receive the maximum reimbursement possible. Use phone calls, letters, and emails to notify them on a regular basis until the debt is resolved.
3. Run accounts receivable reports frequently.
As mentioned above, the longer an account receivable goes unpaid, the less you’ll receive as reimbursement. Because of this, you need to try to keep the days between filing a claim and receiving payment to a minimum. An accounts receivable analysis can reveal significant trends in your collection process, like whether your claims are being denied due to inaccurate coding.
An accounts receivable report also provides insight into:
- Your average cycle length
- Delays between services rendered, invoicing, and payment
- Collection rates
4. Collect payments in the office.
You can also reduce the number of accounts receivable by requiring your patients to pay copayments or bills in the office. Doing so eliminates the need to follow up with them regarding payment. For certain treatments or services, you can also require that your patients pay a deposit or percent up front rather than the bill—although this doesn’t reduce the number of accounts receivable, it increases your cash flow.
5. Increase the frequency of your billing cycle
Many providers only send out bills and invoices once a month. However, if you increase the frequency of this process, you can be reimbursed for your services faster. Consider submitting patient or insurance invoices weekly to improve your accounts receivable process.
6. Embrace automation.
Integrating automated accounts receivable software is one of the most effective ways to upgrade your accounts receivable process. These programs allow you to reduce repetitive, time-consuming tasks like performing benefits verifications or claims submissions. This frees your staff to focus on higher-level tasks, eliminates human error, and significantly speeds up the invoicing and payment process.
7. Outsource your medical billing processes.
Often, your in-office staff doesn’t have the time or resources to manage accounts receivable effectively. Similar to leveraging automation, outsourcing your medical billing processes allows you to increase the efficiency and accuracy of your accounts receivable process and helps you maximize your reimbursements. Many healthcare organizations choose to outsource their billing processes to keep accounts receivable days as low as possible.
Enhance Your Accounts Receivable System With Horizon Healthcare
Upgrading your accounts receivable process can seem overwhelming at first. However, by partnering with a leading medical billing provider like Horizon Healthcare, you can optimize your accounts receivable system and maintain a healthy revenue cycle. We strive to help you increase revenue, reduce write-offs and error rates, allocate resources more effectively, and enhance your organization’s overall performance.
We understand that your primary goal is to provide exceptional care to your patients—let us handle the financial nitty-gritty. Reach out today, and let’s discuss how we can best support your healthcare organization.
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