In 2018, a prominent Illinois hospital reported a $92 million accounting error after discovering they had heavily overestimated their accounts receivable (AR).
Days in accounts receivable is a tried and true measure of how well your hospital is collecting debts. And if you aren’t performing well, you can be sure your financials are bearing the blow.
The solution? First, you need to understand why you’re losing money in ARs. Only then can you start cutting down AR days and improving your revenues.
If you’re wondering why you’re losing profits in accounts receivable, here’s why and how patient financing can help you stop it.
Why You’re Losing Accounts Receivable
Experts suggest that the top 5 reasons hospitals lose ARs are:
- Inaccurate patient information
- Insurance denials
- Restrictive payment methods
- Lack of medical necessity
- Missing upfront collections
Even if you are performing well in these categories, you may still be falling behind. From unmotivated staff to an absence of AR leaders to the wrong technology, things you may not think are related to accounts receivables may still affect your finances.
To stop losing money and start collecting your accounts receivable, use AR day benchmarks. For example, identify how many accounts are in collections, how many claims are older than 90 or 120 days, and how many accounts are cleared before 30 or 50 days.
According to the AAFP, AR days should remain below 30 days or 50 days at the most. Not quite hitting that goal? Here’s how to start improving your AR collections.
How to Improve AR Days
Revenue cycle managers preach that AR days can be cut down by communicating with patients about out of pocket costs, assuring your patient financial services department is both well-staffed and well-informed, and strategically choosing payers with a track record of paying on time.
Another method is to install a payment plan for patients. That way, you can target patients who have a history of delinquent accounts before they leave the hospital. These patients get the choice to pay small installments in a timeline that suits their budget and you know you’re reimbursed for your services.
Yet payment plans can actually increase your AR days since you won’t see the full account collected until the end of the repayment term.
Patient financing, however, is different.
Epic River’s patient lending program connects patients in need with our partner financial institutions. What makes our program special is that you’re paid upfront and in full, decreasing AR days all while you help patients access better ways to pay
Check out our case studies to see how we’re already helping hospitals reduce AR days. And get in touch to find out how we can do the same for you.