Managing patient accounts receivable (A/R) is crucial to maintaining a practice's financial health. However, it's shocking how many practices do not pursue collections after a few statements, choosing to write off the debt or send it to collections instead. This approach not only impacts the revenue but also negatively affects the practice’s reputation and patient relationships.

Implementing automation in the A/R process allows healthcare providers to collect outstanding balances efficiently without increasing employee hours.

The Benefits of Staying Ahead on Patient A/R

Effective management of patient A/R is crucial for several reasons:

Financial Stability: Efficient A/R management directly impacts a practice's cash flow and overall financial health. Delayed payments can lead to cash flow problems, hindering the ability to cover operational costs and invest in improvements.
Patient Satisfaction: Clear financial policies and flexible payment options improve the patient experience. When patients understand their financial responsibilities and have convenient ways to pay, they are more likely to be satisfied with their overall care.
Regulatory Compliance: Adhering to billing regulations and maintaining accurate financial records are essential for compliance with healthcare laws. Responsible A/R management ensures that your practice stays within legal guidelines, avoiding potential fines and legal issues.
Avoidable Diminishing Returns: It’s important to recognize that the longer a balance remains in A/R, the less likely it is to be collected. As time passes, patients may forget about their outstanding balances, move away, or face financial difficulties. Prioritizing early collection efforts and maintaining consistent follow-up can mitigate these diminishing returns.

Conduct Patient Accounts Receivable with Ease

Here are some strategies to optimize patient A/R and ensure financial stability for your practice.

Train Your Patients on What to Expect

Educate patients about their financial responsibilities and the importance of timely payments. Providing clear communication and support can enhance patient compliance and satisfaction.

Paperless Patient Experience

Embrace a paperless patient experience by offering an online payment portal and quickly delivering electronic statements. According to US Bank’s Healthcare Payment Insight Report, more than half of consumers want their billing information via email. Minimize the number of steps a patient can click to pay.

Communicate a Good Faith Estimate

Under the No Surprises Act, providing a good faith estimate of the cost of care upfront allows for transparency and patient trust. Estimating patient responsibility upfront enables prompt payment collection at the time of service, streamlining the revenue cycle.

Accept Credit Cards

Patients are increasingly comfortable with keeping a 'card-on-file' for recurring payments, 42% even prefer a stored card as their payment method. Accepting credit cards not only makes it convenient for patients to pay their bills but also ensures timely collections.

Offer Payment Plans

Flexible payment plans can help patients manage medical expenses without defaulting on payments. Clear guidelines for payment plans, including interest rates and schedules, promote transparency and compliance.

Self-Pay Discounts

Providing discounts for self-pay patients can encourage prompt payments and reduce outstanding balances. Ensure these discounts are communicated clearly to patients at the time of service.

Timely Payment (First Statement) Discounts

Incentivize patients to pay their bills promptly by offering discounts for payments made within a specific timeframe, such as within the first statement period.

Automated Reminders

Utilize automated reminders to prompt patients about upcoming payments, outstanding balances, and appointment-related fees. Automation ensures consistent follow-up without additional administrative work.

Track Efficiency Metrics

Monitoring key metrics is essential for assessing the health of your revenue cycle. Key performance indicators are targets that show your current process is working smoothly:

Copay Collections Rate: The copay collections rate measures the percentage of copays collected at the time of service. A copay collections rate of over 90% is ideal. High copay collections reduce the likelihood of unpaid balances and improve cash flow.
Net Collections Rate: This metric indicates the percentage of payments collected out of the total amount billed. Aim for a net collections rate of over 95%. A solid net collections rate reflects efficient billing and collection processes.
Clean Claims Rate (Clearinghouse & Payer): The rate of clean claims measures the percentage of claims submitted without errors, both to the clearinghouse and the payer. A clean claims rate of over 95% is vital for minimizing claim rejections and ensuring timely reimbursements.
Days in A/R: This Days in A/R stat indicates the average number of days it takes to collect payments. Keeping days in A/R under 40 days helps maintain a healthy cash flow and reduces the risk of bad debt.
Percentage of A/R Over 120 Days: This metric shows the proportion of receivables outstanding for more than 120 days. Aim to keep this percentage below 15%. Lowering this percentage indicates effective follow-up on overdue accounts and minimizes the risk of write-offs.

If you do not meet the KPI in a specific category, you can work to improve the process by including automation and making payments as easy as possible for the patient. Regularly reviewing these metrics helps identify areas for improvement and ensures optimal revenue cycle management.

Patient A/R Should Not Be Ignored

Healthcare providers can optimize their revenue cycle management and improve overall financial health by implementing these strategies and closely monitoring performance metrics. Prioritizing timely collections and minimizing inefficiencies are essential to achieving long-term sustainability in your medical practice.

Patient A/R Is Worth Pursuing