Accounts receivable management is crucial to the well-being of every medical practice. Yet, many don’t give the business function the attention it deserves. This article will share several reasons why medical AR management is important for your medical practice. We’ll also share some tips to help you effectively manage your AR.
Patient Deductibles are Increasing
The first reason why medical AR management is important is that patients are taking on more of their health care costs. High deductible health plans (HDHP) are more common than ever, and because of this, patients are paying a larger portion of their healthcare costs than they used to.
Since patients may not pay their medical bills in a timely manner, medical practices that don’t adequately manage their accounts receivable may see diminished cash flow. Patient payments towards deductibles have risen by more than 20 percent from 2006-2016, which calls for medical practices to be more diligent in billing and collecting money owed.
Obtaining Payment from Health Insurers is Difficult
As time progresses, it gets more difficult to obtain payment for services rendered. Health insurers require codes to be billed according to stringent requirements, and many rules govern the release of payment. Therefore, a large percentage of claims are denied for a myriad of reasons.
To secure payment from patients’ insurance providers, it’s essential to take steps to recover funds that the insurance has indicated they aren’t liable for. It takes calculated management protocols executed by a dedicated AR staff to obtain these funds, especially on a large scale.
Cash Flow Decreases in the Absence of AR Management
Carrying an accounts receivable balance means less cash flow into your business. Conversely, the more you reduce your AR days, or shorten the amount of time it takes to secure money owed, the more cash flow you’ll have. Cash flow is essential for the day-to-day functioning of your practice; you need cash to:
- Market your business to bring in new patients.
- Pay your practice staff.
- Buy clinical and clerical supplies necessary for the provision of care.
- Purchase medical equipment.
A company with predictable cash flow is better off financially than one that doesn’t know when its next dollar will come in. Getting a handle on AR management gives you better control over your cash flow, and when AR is well-managed, your finance office can make better financial projections.
If you think that your practice is not providing free services, you may be mistaken. Without AR management, you may be giving away free care.
It’s not uncommon for medical office staff to:
- Forget to bill patients.
- Overlook missed patient payments.
- Neglect to submit a claim to a patient’s health insurer.
- Stop pursuing payment on an unpaid balance prematurely.
In the absence of adequate AR tracking and monitoring, you may be losing a sizable amount of money each month.
Effective Accounts Receivable Management Takes Effort
Many medical offices aren’t effectively managing their accounts receivable because it is quite an endeavor. In this section, let’s look at a few tips that you can use to ramp up your AR management efforts now.
Send Out Bills Quickly
The quicker you send a bill to the patient, the faster you can secure payment. On the flip side, the longer it takes for you to bill the patient, the longer it could take to obtain payment. A good rule of thumb is to bill the patient within 30 days of the service date.
If you don’t have a staff member tasked with completing this business function, it’s easy to get behind on billing patients. However, billing patients promptly is a step that must not be overlooked.
Draft a Procedure for Overdue Balances
While some patients pay their balances on time, many do not, and these balances go into overdue status. When this happens, there must be a procedure for notifying the patient of their outstanding balance.
The following must be planned out:
- Determining the mode of patient communication to use (phone, email, or mail).
- How to effectively communicate the amount due and why.
- How to automate the collection process as appropriate.
You must work with your team to determine the best course of action for obtaining payment.
Offer Payment Plans
Every medical office must have the capacity to draft payment arrangements to minimize accounts receivable balances. Often, a patient will not be able to pay a large bill in full at the time of service or even a year down the line. Without a payment arrangement option in place, the patient may not ever submit a payment. But if your office can take a smaller portion of the payment upfront and obtain the rest via monthly payments, there’s a much higher probability of recovering the full balance.
Make Payments Convenient
Patients are more likely to pay if it’s easy to do so. For instance, making mobile payments available to patients can increase your cash flow exponentially. In addition, accepting all major credit cards is also helpful. If a patient wants to pay their bill with an American Express credit card and your office doesn’t take that form of payment, you may never receive payment for that bill.
Let the Experts Manage AR For Your Medical Practice
You may have gathered by this point that managing accounts receivable is no small task, and you’re correct. It requires tracking and monitoring financials and taking action on balances due, among other things. Being that efficient accounts receivable management has a direct effect on the profitability of your company, it’s in your business’s best interest to allow experts to manage your business’s AR functions.
Data Search Inc. is a full-service accounts receivable management firm that has been operating in the medical industry for 40 years. The AR firm has gained extensive experience securing payment from both patients and health insurers. They work to increase your cash flow, decrease your AR days, and give you peace of mind.
The sooner you take control of your practice’s AR management, the sooner you can improve your bottom line.