Strategies to Reduce Hospital AR Days and Increase Collections

Just like you, reducing overall hospital accounts receivable days is one of the most critical burdens for most hospital managers and billing professionals. The truth is that you cannot ignore this particular component as your hospital’s cash flow highly relies on it. It is almost impossible to improve your hospital’s cash flow if you are having high AR days. If you are experiencing high AR days, you must address this issue immediately. The sooner you are able to resolve the issue, the faster you can improve your hospital’s bottom line and focus on providing an excellent patient care. But, before you address this issue, you should know what hospital accounts receivable is and how to count hospital AR days.

What is hospital accounts receivable?

In a simple manner, hospital accounts receivable can be considered as the delinquent accounts or pending invoices. In the dynamic nature of hospital industry where federal and private insurance companies are constantly change their rules and regulation, a proper AR management for hospital is an absolute necessity. To manage your hospital AR, you must know what AR days are.

How to Count Hospital Accounts Receivable (AR) Days?

For a clean and accurate claim, you should expect to receive payment within two working weeks. The surprising truth, according to the American Hospital Association, is that nearly half of hospitals and healthcare practices were dealing with bad debt from unpaid accounts. The total amount of debt was almost $100 million and delinquent accounts aged more than 180 were the prime culprits behind this whopping amount of debt. Ideally, you should always try to submit a claim within 72 working hours,

If you’re constantly facing late collections and rising overdue payments, your hospital’s “Days in AR” will increase.

To measure your Days in AR, divide your total accounts receivable by your daily charges. The American Academy of Family Physicians suggests keeping Days in AR under 50, but aiming for 30-40 days is ideal.

A practical way to organize your overdue accounts is by their age like below

• 0-30 days
• 31-60 days
• 61-90 days
• 91-120 days

The older an account is, the less amount you can retrieve from that account. The fact is that you can only expect to receive 3 cent per dollar from an account older than 120 days.

Keeping track of AR days is the key to understanding how long it takes to collect payments. This helps you find ways to boost collections and improve your revenue. For example, one hospital saw their AR days going up, showing delays in payments. By looking into the data, they found problems in their billing process, fixed them, and reduced AR days, which improved their cash flow.

Unfortunately, managing hospital AR services is not an easy affair due to the factors mentioned below:

• Common pitfalls that increase hospital AR days are-
• Late claims filing
• Poor patient insurance-eligibility verification method
• Coding mistakes
• Data entry errors
• High rate of claim rejections
• Inefficient appealing process
• Delays in credentialing
• Inefficient payment posting
• Delayed payment collection

Fortunately, with some proven strategies you can reduce AR days in your hospital AR management process.

Strategies to Reduce Hospital Account Receivable (AR) Days And Increase Collections:

1) Evaluate the real-time hospital AR situation:

To start reducing your Hospital AR days, you need to know where you stand. How long does it usually take for your patients to pay their bills? How long are your payer invoices unpaid? Answering these questions gives you a starting point to build your hospital accounts receivable strategy.

Once you’ve gathered information about your facility’s AR, you can set a goal to reduce your AR days. It is always recommended to start with the aim of reducing hospital AR days 30%!

2) Carefully review claims before submission:

Inaccurate claims are the prime reasons behind denied claims, payment delays and increased account receivable days for your hospital. You should never rush with sending out claims as it always increases the chance of mistakes. Any mistake in your billing process can cause claim rejections and hampered cash flow. Always take extra time to check each claim carefully as this would help you save a substantial amount of stress and receive payments faster.

3) Insurance Verification before Patient Appointments:

It’s important to check a patient’s insurance info before their appointment to know their coverage and costs. Your front-end staff should collect and confirm details like insurance, personal information, and contact info to ensure everything is up to date before each visit. For example, a patient might have switched insurance since their last appointment. By verifying their eligibility ahead of time, you can spot any unpaid balances from previous visits, allowing you to tackle payment issues early and avoid surprises later.

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4) Let your patients know about your payment expectation:

It is always important to let your patients know about your payment expectation at the very beginning. At the time of appointment scheduling, you must inform your patients about the payment that they are supposed to pay, your preferred payment method, etc. If you require payment upfront, let them know that as well.

5) Communicate with insurance companies:

It’s important for you to have a follow-up plan to check in with a patient’s insurance company about the status of payments. This enables you to keep a proper tab on all your pending invoices.

Unfortunately, the majority of hospitals do not have enough resources to handle hospital AR services and that’s why, they prefer to hire a hospital accounts receivable company like Sunknowledge . By choosing Sunknowledge for your AR collection, you can focus on your patients while our experts manage the entire AR process and help increase your revenue. We believe that no bill is too old.

If you need strong support for hospital AR management, Sunknowledge is the right choice. Our team offers efficient help to ensure all your payments flow smoothly. We provide customized support and high productivity to maximize your return on investment, even for larger operations.

Contact us today to create your own AR success plan!