For healthcare practices, ensuring smooth cash flow is essential to maintaining operations, paying staff, and investing in patient care.
However, accounts receivable (AR) delays can disrupt financial stability and create unnecessary stress for providers and administrators alike. While often overlooked, AR turnaround time has a profound impact on a practice’s bottom line, making it crucial to address payment delays effectively.
Understanding AR Turnaround Time
Accounts receivable turnaround time refers to the period between billing a patient or insurance company and receiving payment.
When payments are delayed, practices face not only financial strain but also administrative burdens as staff work to chase overdue claims and resolve errors.
The Hidden Costs of Payment Delays
- Revenue Loss Due to Write-Offs: The longer a claim remains unpaid, the higher the likelihood it will never be collected. Practices may have to write off unpaid balances as bad debt, directly impacting their revenue.
- Increased Administrative Costs: Payment delays require additional time and effort to manage outstanding claims. Administrative staff must dedicate hours to following up with insurance companies, resubmitting claims, and correcting errors. This increases operational costs and takes away time that could be spent on other priorities, especially when a practice is small.
- Cash Flow Disruptions: Delayed payments can create cash flow gaps, making it difficult for practices to cover operational expenses such as salaries, utilities, and supplies. This instability can hinder growth and put unnecessary stress on practice administrators.
- Patient Dissatisfaction Payment delays can also trickle down to patients. If a practice’s financial strain results in reduced staff or slower response times, the patient experience suffers. Furthermore, patients may become frustrated with unexpected billing issues or delays in resolving their accounts. This opens up your practice to poor reviews, lost patients and potentially fewer leads
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How to Improve AR Turnaround Time
- Streamlined Billing Processes: Efficient billing processes are essential to reducing AR turnaround times. This includes ensuring claims are accurate before submission, using billing software to automate repetitive tasks, and keeping up-to-date with insurance requirements.
- Investing in Expert Support: Outsourcing billing and coding tasks to remote professionals, such as those provided by 5-Tek Medical, can significantly reduce AR turnaround times. These experts are well-versed in handling insurance claims, minimizing errors, and following up on unpaid balances to ensure faster payments.
- Proactive Denial Management: Denied claims are a common cause of payment delays. Practices must adopt a proactive approach to denial management, including identifying patterns, addressing root causes, and providing staff training to prevent future denials. Alternatively, 5-Tek’s specialist team can focus on this issue.
- Regular AR Monitoring: Monitoring AR metrics, such as average days in AR and collection rates, helps practices identify problem areas and make data-driven improvements. Practices should aim to keep the percentage of claims older than 90 days as low as possible.
- Effective Patient Communication: Clear and timely communication with patients about their financial responsibilities can also reduce AR turnaround times. Providing cost estimates, setting up payment plans, and offering online payment options make it easier for patients to settle their accounts promptly.
Success Stories: Reducing AR Turnaround Time in Action
One healthcare practice reduced its AR days by 20% within six months of outsourcing its billing operations to a remote team. By leveraging the expertise of dedicated billing professionals, the practice was able to address claim errors more efficiently, follow up on unpaid balances proactively, and improve its overall cash flow.
Another multi-specialty clinic implemented advanced billing software and denial management protocols, resulting in a 30% decrease in claim denials and faster payments from insurance providers. This improvement not only stabilized cash flow but also allowed the clinic to invest in new equipment and expand its services.
The Bottom Line
Reducing AR turnaround time is not just about improving financial metrics—it’s about ensuring the stability and growth of your healthcare practice.
By addressing payment delays, practices can reduce costs, improve patient satisfaction, and focus on delivering exceptional care. Partnering with remote staffing solutions like 5-Tek Medical offers a proven path to faster payments and fewer headaches.
