The Role of Healthcare Accounting in Managing Accounts Receivable

Accounts receivables (AR) in healthcare represent the outstanding medical bills for services rendered. These are either debts owed by private insurers, patients, or the government. Without proper management, AR days (time taken to collect payment) become lengthier, making it difficult for facilities to meet their financial obligations adequately. Again, as patients take longer to pay their medical bills, the risk of defaulting increases. Statistics show that out of the 30% of patients who leave the hospital without paying, 50% do not pay at all.

However, hand-on accounting provides a clear view of the financial position of a facility at any time, including accounts receivable. Among other things, the team tracks payments from the point of initial appointment until payment, ensuring claims are filed, processed, and collected on time.

Using key metrics, a healthcare accounting team can gain insights into accounts receivables’ performance and take necessary steps to improve. Some of the possible solutions they can implement to counter the challenges may include:

• Reviewing claims thoroughly before submitting – Reports show that inefficient claim processing leads to losses in the tune of billions of dollars. Further, most of the rejected claims are never resubmitted. You can increase the approval rate by stepping up your healthcare accounting, e.g., conducting thorough claim processing to minimize denial.
• Reducing patient defaults – Studies have shown that half of the patients who leave the hospital without paying their bills never pay. While some patients fail to pay due to financial constraints, most of the debts can be recovered if hospitals stepped up their collection efforts. With effective revenue cycle management, the accounts department can expedite claim processing and inform the patients of the deductible amount they should pay promptly. By preparing the patients or their loved ones early, you can increase their chances of paying before leaving the hospital, reducing the likelihood of bad debts.
• Eliminating unnecessary write-offs – Write-offs are inevitable in business. That’s why making a provision for bad debts is essential when preparing financial statements. However, sometimes providers make unnecessary write-offs, especially for small debts. The figures may not be substantial individually, but cumulated, they can make up a sizeable amount of accounts receivables.

With the cost of living ever rising, most people focus on meeting basic needs, pushing medical bills down their list of priorities. As such, hospitals, particularly the accounts team, have to be proactive in debt collection or risk writing off more debts. For instance, you can contact each patient and agree on a payment schedule that favors them. You might be shocked how many people would be willing to clear their medical bills if they were allowed to make small installments.

• Outsourcing accounts receivable – Outsourcing some parts of your accounting function is always beneficial, no matter the size of your business. While an experienced in-house team has immense benefits, maintaining them can be costly. Hence, outsourcing is always an affordable alternative if you don’t have staff experienced in accounts receivable management.

Hiring experts skilled in healthcare accounts receivables management can help you step up your revenue cycle management in many ways. For instance, owing to their industry exposure, they can recommend the best collection processes and solutions that suit your facility, provide you with the right tools to encourage prompt payment by patients, conduct accurate claim processing to hasten payment by insurers, etc.