Unfortunately, many holistic practices simply let their accounts receivable (A/R) metric to be a black box of misunderstanding, when in reality, it’s one of the most important numbers to know when gaining an overview of your practice’s financial standing.
This figure indicates the financial health of your practice, which is essential to know when making budgeting decisions and planning for the future. Keep reading to learn more about this important figure and how to track it!
What Are Accounts Receivable Metrics?
Accounts receivable is the money owed to your practice for services rendered and billed, which is a high-touch area of every holistic practice. So if you aren’t sure what your practice’s A/R figure is, it can be hard to gain a holistic understanding of how long it’s taking you to get paid.
Essentially, your holistic practice’s accounts receivable metric rises when you provide your holistic services on credit terms. The continuous tracking of your accounts receivable facilitates the timely payment of your debts.
Your holistic practice risks accumulating bad debts if you fail to monitor your accounts receivable. As such, the decision to offer your health care services on credit terms comes with the additional responsibility of managing accounts receivable.
Why Should Your Holistic Practice Track Accounts Receivable Turnover?
If patient visits are stable, incoming cash should be too – which is why it’s vital for holistic practices to
understand how many days pass between the bills going out and the payments coming in.
A practice’s accounts receivable (A/R) indicates how many payments have not yet been collected, whether for insurance reimbursements or out-of-pocket services. In a healthy holistic practice, the goal is to streamline your operations to get your practice paid faster, which could involve eliminating billing and coding errors or doing a better job of following up on claims. Tracking the amount of time claims spend in A/R can help practices identify which payers are behind and build rapport to understand why.
With knowledge of the average time that passes between patient visit and payment collection, you can easily spot whether your team is slow to submit claims to payers. Plus, you’ll understand just how much funding you need to keep in the bank – and for how long – in order to sustain your operating expenses prior to reimbursements.
How to Calculate Accounts Receivable
To get a sense of your starting point, calculate your current “Days A/R” by looking back at your billings:
- Compute the average daily charges for a set number of months by adding up the charges posted for that period, and dividing by the total number of days in those months.
- Divide the total accounts receivable by the average daily charges.
The result is the average days in accounts receivable. For example, if you look back at the last three months, you can consider that a starting point for ongoing measurement on a quarterly basis. If you compare those three months to the three or six months that precede them, you can understand if that baseline is consistent with your performance over time.
A/R within 30 days is the golden standard. If you’re averaging over 60 days in accounts receivable, investigate immediately. Is there a payer stalling on payments? Are denials spiking around particular procedures? Have there been errors in your claims requiring resubmissions?
If you’re in the zone of ~45 days – or ideally, less – you can start monitoring and understanding your billings better by bucketing and aging your receivables.
As you know, every payer operates on their own schedule. You can correlate payments coming out with bills coming in to gain an understanding of when an insurer reimburses you. This could be within a 30- or 60-day window – providing your team with more knowledge on when a given bill has reached its “late payment” threshold and it’s time to contact the payer.
Best Practices for Lowering Days in Accounts Receivable
Conduct Timely Invoicing
Prepare and dispatch your invoices immediately after rendering holistic services on credit. Each invoice should
have the client’s name, account number, date of transaction, description of the holistic services rendered, any discounts offered, and total payable amount.
These details are crucial in tracking your accounts receivable after transferring them to your sales journals and general ledger accounts. Invoices are also useful in case of errors or disputes, such as overcharges and undercharges, that may arise in the future. Make follow-up calls to confirm your clients received their invoices.
Track Every Claim
No claims should ever get “lost” in your practice management system. If that’s happening to you, it’s imperative to implement a more comprehensive process for tracking where claims stand throughout the entire revenue cycle.
In many cases, claims slip through the cracks because they’re not handled fast enough by the team at your practice. Make sure your coders are coding every encounter on the same day as the date-of-service, then upgrade your technology to a system that scrubs, submits, and monitors claims with minimal employee effort.
Educate Patients
Most patients have only a vague understanding of how holistic practices collect payments from insurance providers and may not have a clear sense of their financial obligations when they consume holistic services.
Providing a brochure or reference sheet to all patients that outlines their role and responsibilities in the payment process can clear up a lot of confusion. It’s also important to have someone on staff who has the financial expertise to answer any questions patients may have about how the claims and payment process works.
Outsource Your Medical Billing
Whatever the cause is behind your accounts receivable metrics, partnering with a reputable medical billing service is one of the fastest and easiest ways to turn this key revenue metric around. Experienced medical billing services can overhaul the way a practice codes its services and how it submits claims to payers to minimize the rate of denials.
Outsourcing your medical billing process to a third party also frees up time for office staff to focus on providing the best service and care possible. Instead of spending hours on the phones trying to collect outstanding payments, a specialty practice can focus on expanding its patient base and improving its healthcare experience to better retain the patients it already has.
The experts at Holistic Billing Services believe that our success is your success. From handling medical billing and coding to offering consulting services and much more, our team is dedicated to making it feel like we’re in-house.
With a focus on holistic practices, insurance background, and proven consultants, our team can effectively ensure the financial success of clients, allowing your medical practice to focus on what it does best: treat patients.
Holistic Billing Services’ expertise is rooted in professional, technical, and global billing for hospital and stand-alone holistic care practices. To learn more about how outsourced medical billing with Holistic Billing Services can empower your practice, contact us today. We’ll work with you to build a customized solution that meets the specific needs of your practice and allows you to get back to treating patients.