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How To Improve Medical Clinic Receivable

Proper management of your healthcare account receivable will streamline cash flow and help your medical clinic operate smoothly. Optimizing your medical clinic account receivable involves good revenue cycle management, running AR reports, and gearing effort towards optimizing administration, among other things. The essence is to ensure that your account receivable gets converted to cash so you will not run low on or run out of money.  

 Account receivable management is critical for every medical organization, regardless of size. It can make or break a business. When there’s a constant delay in reimbursement from clients, your company can run the risk of falling into a cash flow shortage. Thus, you might find it difficult to pay bills, perform duties effectively, and in a worst-case scenario, your business might fail.  

Read on as we highlight some working strategies that will help you recover what otherwise would be lost revenue.

What Is an Account Receivable for Medical Clinic

A medical clinic account receivable is defined as money due to a health service provider for issued treatments or services that are not yet paid for by the patient or their insurance companies. As a healthcare provider, you must gear efforts towards collecting reimbursement for accounts receivable for effective cash flow. 

Accounts receivables are shown on the balance sheet as a current asset and represent money due to you in the short term. In other words, you have the right to receive it because you performed a specific service. Therefore,  it represents a line of credit that a company extends to its clients and normally comes with terms that require payments to be made within a relatively short period of time.

5 Tips for Improving Medical Clinic Receivables 

One major aspect of your business finance that you must focus on to ensure optimal cash flow is your account receivable. Your account receivable is very important for your medical clinic operations. This is because the day-to-day workings of your business hugely depend on efficient payment processing. Here are tips that can help you improve your account receivable.

Run Account Receivable Report Continuously 

Consider Keeping track of your account receivable report by running A/R reports monthly to identify trends and changes. While running the report, include aged receivables to track progress with older bills. These reports should be done from the service date instead of the billing date to figure out billing schedule issues. Ideally, there shouldn’t be more than 20% of A/R over the 90 days. Though, these statistics vary based on specialty, practice size, and payer mix.

Set Payment Expectations with Patients and Insurance Companies

You can reduce patients delayed or default payments by setting the expectations for their financial responsibilities beforehand. Setting the payment terms ahead of scheduled visits is vital as it will help clarify to patients the nature of their payment schedule. In addition, ensure you collect patients’ copays before they leave; otherwise, you risk losing the money. When patients fail to make an immediate payment following their appointments, you are 20% less likely to get reimbursed.

Collecting immediate payment from your patient is important as it helps bring one part of the AR cycle to an end and makes tracking efforts easy down the line. More so, by integrating prompt collection with release processes, you will avoid the danger of default payment. Experience has shown that nearly half of all patients’ financial responsibility ends up as bad debt.

In addition, when patients cannot foot their portion of the bill directly, you should consider offering partial payment plans to lock up some reimbursement and set up an easily tracked schedule.

Increase Amount Billing Cycle

It will help if you try mailing patient invoices weekly and insurance companies’ invoices twice weekly. However, most clinical offices often mail bills once a month which might hinder efficient cash flow. So consider upping your amount billing cycle as a bill can be paid sooner the faster it gets to the proper recipient.

Collect Payment in the Office

To reduce aged receivables and decrease bad debt, ensure that patients submit their copay before leaving the office. In addition, ask your staff always to submit a report of collected copay so you can identify delinquent payments quickly.

Several practitioners estimate benefits ahead of surgery and ask for payment of the full estimate or a certain percentage of it. Many clinics are following these procedures, and patients are getting used to them. Further, some medical practitioners adopt a ‘card on file policy that requires patients to keep an active credit card on file and carry an auto-run policy. 

Outsource When Necessary

If you still find yourself at a crossroads over how to reduce medical clinic account receivable days or lack the requisite tool to evaluate their current processes, consider outsourcing it to professionals. This will help reduce your account receivable and revenue loss and reduce the stress involved in managing your A/R.

Final Thought

The importance of improving your medical clinic account receivable cannot be overstated. Optimizing your hospital’s account receivable management system can free up a lot of money to enhance cash flow, reduce debt, and finance expansion. Additionally, it can help your business maintain a healthy financial outlook. Using the best account receivable management strategy will help ensure that your business doesn’t end up with too much capital stuck in account receivables. 

Does Your Medical Clinic Need Financing?

Inadequate cash flow can impede your ability to keep up with operating costs, pay your employees, and avoid bankruptcy, especially when you’re battling with increased accounts receivable. Smart business owners always look for alternative means of financing to cater to emergencies or strategic business opportunities. Thus, a business line of credit is essential for your healthcare organization. 

At Financing Solutions, we provide an unsecured easy-to-setup business line of credit to small businesses and nonprofits. Our business credit lines help businesses to maintain a healthy financial outlook and stay afloat while they wait for reimbursement. Financial Solutions’ business lines of credit, with instant approval, require no collateral or personal guarantees. Additionally, it costs nothing to use or set up, and when used, it’s inexpensive.   

If you require a credit line for your healthcare organization, don’t hesitate to fill out this no-obligation, 2-minute business line of credit application here.

 

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