Understanding account receivables in healthcare
Account receivables in healthcare refer to the reimbursement owed to providers for treatments and services that are issued, and they are vital to the success of healthcare practices. Without good record-keeping processes of debts and payments, and lack of follow-up on outstanding ones can mean that your healthcare practice may not be able to pay for costs. To avoid this, you may need to read on for medical billing 101.
You must understand the significance of aged receivables and how to implement appropriate business processes to prevent mismanagement successfully. Going into debt is certainly not ideal, and if you work in a healthcare team, you need to be able to pay salaries. As a result, we’re here to guide you through challenges to avoid, as well as how to overcome them. With healthcare being over a 500 billion dollar industry, it’s essential you know how to use medical billing and other relevant practices to ensure you can deliver a high standard of care to your patients.
How Is Medical Accounts Receivable Unique?
There are various reasons why accounts receivables are unique within the medical context, and here’s why:
Its composition - Accounts receivables in the medical realm are concerned with the involvement of insurance providers and amounts owed and increased risk of late payments. It involves various medical aspects in its financial statements that make it unique to the healthcare industry.
Value changes - The value of accounts receivables can fluctuate and lose weight over time, which can be troublesome.
Growth of plans - The development of high-deductible healthcare plans can increase the financial responsibility on patients, as opposed to their insurance companies. This results in reduced reliability, with healthcare businesses less likely to receive payments. For instance, only one-fifth of what patients owe is usually obtained by healthcare facilities. Failure to follow up can result in limited cash flow and more operating costs, which could lead to bankruptcy. Thus, it the importance to be on the know when it comes to medical billing 101.
Four dangers/challenges to avoid in healthcare accounts receivables
To guide you towards the dangers of aged receivables when it comes to healthcare, we have collated some of the most common challenges, so you know what to avoid:
- Disorganized processes - To function well, you have to have organizational approaches that effectively manage patient information and medical services, and equipment used. There must be a high degree of transparency in billing, deadlines, and payment confirmations to avoid a negative customer experience and allow accurate contractural allowance and reservation methodologies. Your day-to-day operations need to run smoothly with good analysis.
- Denied insurance claims - While insurance companies frequently change their policies, it is up to you to keep up to date to ensure that your claims are accurate and free from errors. Denied claims can result from late filing, missing information, coding errors, lost claims, and duplicate submissions, and not correcting such issues can lead to a lengthy amendment process. This means your money is not fully utilized, and you will have to waste additional time and effort sorting through rejections and appeal processes. With correct medical billing and coding processes in place, you should be able to overcome any delays.
- Restricted payments - Accepting various payment options allows you to meet your customers’ needs better, as different possibilities enable greater flexibility. Limited amounts mean there is a reduced likelihood of clients paying on time, increasing the chances of delays. Listening to what your patients prefer for billing transactions is vital towards avoiding rejections down the line and growing cash flow. If you can’t offer this, clients are more likely to shift to a healthcare practice that can provide what they need.
- Wrong resources - You may not have the right resources in place when it comes to account receivables. For example, you need to have staff with the skillsets to sustain and maintain complex business processes concerning finances. This means not only you and your healthcare team are capable, but you should also ensure everyone knows how to use technology appropriately and that they have the proper training.
Effective practices for managing aged receivables
To ensure you’re implementing the proper practices and directing the right resources, we have collated some ideas for you to incorporate for effective medical billing solutions. In the US especially, medical billing can be tricky with changing insurance policies, but this doesn’t have to be complicated. Many successful medical billing companies harness the following tips:
- Automation - One of the easiest ways to avoid invoice and processing errors is to use accounts receivable automation. This increases the efficiency of financial processing and provides an easy way for you to attend to the important stuff, without concern of silly human mistakes (which we all make!).
- Prioritize relationships - A successful healthcare business will make the customer experience a priority. Having transparent processes and open communication will put you in many patients’ favor, and they can also alert you to any issues concerning accounts receivables.
- Collect payments in real-time - Ensuring that patients pay on time is a highly effective way to verify that your money is coming in. This may mean offering payment incentive plans to promote and encourage early payments.
- Follow-up! - For outstanding accounts that haven’t been paid, you must follow these people up with letters of demand or courtesy calls. It may be as simple as the patient forgetting, in which case you should implement reminders, but establishing a clear policy of overdue payments can increase your accounts receivable.
- Hire the right people - Your staff needs to be educated and trained to handle financial collection processes and other essential business operations. Failure to do so can result in more customer issues, absent payments, and backlogs, presenting complications.
- Look at aging reports - Aging reports can help you identify delinquent accounts, habitual late-payers, as well as any areas that need improvement. These break down debt and how long they’ve been outstanding, which is incredibly useful to increasing accounts receivable.
- Collect information - Especially with an automated system, it’s helpful to compile patient information concerning finances and claims. This data can be used in many different ways to improve your business.
Although a more tedious aspect of running a healthcare business, it’s vital that you understand the common pitfalls of aged receivables and how to avoid them. Doing so will enable you to successfully establish a financially sound healthcare practice that can prioritize your clients’ needs.
If this all sounds difficult to you, there are many healthcare platforms, such as Carepatron, that create software for clinicians to help with the day-to-day operations of your business. With high-quality medical billing and coding processes, you can ensure your claims are accepted with minimal errors and that you can easily follow up on payments to stay on track. It’s the best way to navigate accounts receivables in a seamless format that anyone can use.
Get Carepatron for free today and show us your receivables love!