There are many moving parts to your practice’s revenue cycle management (RCM). But one of the most critical components is your accounts receivable, or A/R. Tracking and improving accounts receivable in healthcare is crucial for building a thriving, financially strong practice.
Let’s dive into some essential knowledge and best practices around healthcare accounts receivable.
Accounts receivable in healthcare (A/R) are the invoices or reimbursements owed to a medical practice, hospital or other healthcare organization. These unpaid accounts may include outstanding patient invoices or insurance company reimbursements.
Once your practice bills a patient or submits a claim to a health insurance company, the A/R process begins. After the patient pays the invoice or the insurance company reimburses your practice, the account is no longer in A/R.
In healthcare RCM , we categorize A/R based on age, usually in 30-day buckets:
Accounts receivable is a normal part of the medical billing and healthcare RCM process, but it’s not something you can ignore. The more accounts you have in A/R, the less money your practice collects. And unfortunately, the longer an invoice or claim stays in A/R, the less likely your practice will get paid in full.
When your practice’s A/R piles up, you have less cash flow to maintain operations and pay staff. Eventually, you may have to write off patient payments that are late or unpaid (also called “bad debt”), which is lost revenue for your business. Reducing and maintaining your A/R will help your practice thrive and avoid financial hardship.
Maintaining healthy accounts receivable in healthcare means tracking a few critical RCM key performance indicators (KPIs) . These include: