A Comprehensive Guide on Hospital Accounts Receivable: The Key to Boost Revenue

Medical billing is a complex domain that most healthcare professionals find challenging to manage. It covers a wide range of activities, from submitting insurance claims to payment tracking, posting, etc. Hospital accounts receivable plays a critical role but an amateur in-house staff often finds it challenging to manage the various aspects of this process. Fortunately, there are effective ways that you can leverage to improve the overall hospital accounts receivable management.

Before we delve into the effective ways to handle hospital AR, you should know what accounts receivable are.

What are hospital accounts receivable?

Hospital accounts receivable is the total amount of money owed to your hospital by patients and their insurance companies. Simply, accounts receivable can be defined as pending invoices. There are mainly two ways to measure hospital AR.

To find the “Days in AR”, you should divide the total AR by the daily average charges of your hospital.

Secondly, you can segment hospital AR based on their age bucket. There are 4 chief age buckets for measuring ARs –

• 1-30 days
• 31-60 days
• 61-90 days
• 91-120 days

You should always prioritize the AR based on its age bucket. The longer an invoice remains pending, the less chance of collection you will have. The fact is that you can only expect to receive 10 cents per dollar from an account older than 120 days. Weak accounts receivable management always causes burnout for your financial department and serious revenue loss at the end of the financial year.

To ensure robust hospital accounts receivable management, you should know about the factors that cause high AR.

Factors causing high hospital AR 

Slow insurance reimbursement: 

Insurance companies often take weeks or even months to reimburse the money to your hospital.

Inaccurate coding: 

If you use inaccurate codes, insurance companies may deny claims, thus causing delayed or reduced payments for your practice.

Non-payment from a patient’s side: 

Many times, patients fail to make payments for their part of what is payable because they simply cannot afford them. This can lead to a significant impact on your hospital’s financial health.

To avoid all these factors mentioned above and streamline the perfect hospital AR process, you need to take some proactive measures. You should track your AR efficiently and follow some useful tips to ensure the financial well-being of your practice.

Tracking hospital accounts receivable 

There are several reasons why your hospital must track accounts receivable. Not doing so can cause your hospital to encounter the following consequences-

You may not get timely reimbursements: 

If you do not keep the tab on your delinquent AR, it would be difficult for you to know exactly when payments are due. This can lead your hospital to experience delayed payments and poor cash flow.

You may lose payments: 

Failure to track hospital AR efficiently, you may lose reimbursements that are owed to your hospital. You can face such a situation if a patient pays their bill but you forget to record it or an insurance company processes the claim but you have not received the payments yet.

You may experience budget issues: 

It is important to keep proper track of your hospital accounts receivable to ensure a healthy budget for your practice. Without tracking AR, you won’t be able to know how much money you should expect to receive.

Substantial debts: 

Not tracking AR can put your patients in a significant amount of debts. This can make things inconvenient for your patients to pay and damage your overall relationships with them.

Legal consequences: 

If you don’t track your A/R, you could face legal action, including lawsuits from patients or insurance companies.

Fortunately, there are several ways you can track your hospital AR. It is crucial to choose a specific method that works best for your practice.

Three common AR tracking methods include: 

1. Manual tracking:

With a manual tracking system, you track delinquent accounts by using paper records or spreadsheets. This process may be time-consuming but could be the perfect one if you do not have many patients, or you work on a limited number of claims in a month.

2. Electronic tracking:

With electronic tracking, you use software to automate the AR tracking. This method is more efficient than the manual one but it requires upfront investments.

3. Third-party tracking:

It involves outsourcing your AR process to a third-party revenue cycle management company that specializes in AR tracking. It could be an ideal option if you lack AR resources or time to do it internally.

Now that you know the importance and ways of tracking AR, it is time to know about the critical tactics to improve hospital accounts receivable.

Top strategies to improve hospital AR

Leverage technology: 

Utilizing a robust technology is one of the most efficient ways to improve overall AR management. There are several tracking tools that enable you to ensure payments are received in a timely manner.

Stay organized: 

Always stay organized to track your AR. Keep track of all bills and payments diligently. Make sure there is a follow-up system for late payments.

Patient-communication: 

Clearly communicate with patients about their due amounts and the time of payments before providing services to them. If they have any concerns related to payments, address them clearly.

Communicate with insurance companies: 

It’s important to stay in touch with insurance companies by submitting claims on time and following up on payments.

Outsource hospital accounts receivable management

Hire an expert hospital AR management company. These outsourcing partners specialize in billing and improve hospital accounts receivable by leveraging the perfect AR management process.

Tracking accounts receivable (A/R) in healthcare is essential to make sure you get paid for the services you provide. There are various ways to do this, depending on your needs. You can use technology, stay organized, communicate with patients and insurance companies, or hire a revenue cycle management company to improve your A/R.

Outsourcing your billing can save you time, allowing you to focus more on your patients and practice. If you’re interested in learning more, Suknowledge is here to help. Our expertise can assist you in managing your accounts receivable more effectively.