Lowering Medical Practice AR With Minimal Spending

I’m concerned about leaving money on the table, so how do I get my A/R down and turn that A/R into money in the bank?

Earlier today, a practicing physician came to me and asked me a common and relevant question I hear all of the time. Chances are, if I’m hearing the question more than once, there are many other physicians that have the same problem. Fortunately, the solution is simple.

Practice revenue is either declining or remaining flat since fee schedules are continuing to dwindle. While much of the focus used to be on fee for service, it has now moved to the quality of patient care. It’s important for individual practice leaders to look at these changes as the healthcare system evolves and to respond by eliminating or lowering as much medical practice AR as possible. With the shift to quality, payers are focusing more on denials along with meeting their requirements to maintain their margins.

Fact: A claim sent to A/R for rework by staff costs on average $25 – $50 per claim to the practice.

To optimize the revenue stream, it is critical to focus on resolving A/R in patient accounts quickly and efficiently. Many groups have similar data points and the problems begin in the same areas:

  • 2%–5% of revenue lost or tied up in denials
  • 3%-5% or revenue lost to bad debt
  • 5% – 10% of revenue tied up in AR over 90 days old, and some (2% or more) of that might be lost.

While this is always happening in healthcare, many other industries in the U.S. strictly avoid this kind of debt and way of business. For example, a customer could never walk into Staples and purchase a high-quality printer, show the cashier a card with no money on it, and walk out paying $20 and telling them to call a phone number to get paid. While the cashier completes the process, they might only receive a fraction of the printer’s overall worth. This is unacceptable.

While these difficulties have been a problem in the healthcare industry for a long time, it’s still an issue that needs to be addressed now to benefit individual practices for the foreseeable future. As a business, practices need tools to run more efficiently and increase overall revenue.

“If your practice follows the same pattern of many other groups losing entire percentages of revenue every year to denials, bad debt, and revenue tied up in A/R, there are things that you can do. While a small practice may not be able to change the healthcare industry, they can re-evaluate their practice and focus on the denial and A/R percentages to allow for more revenue and more growth.”


Actionable intelligence: The First Steps

Transparency in practice data is essential to recover lost revenue.

The first step in any practice is creating simple, easy to use, dashboards for staff and leaders to examine and focus efforts.

Creating effective change to workflow processes that are continually causing  problems will jumpstart the practice’s ability to recognize percentages lost. This, in turn, will help practices get a better handle on where the revenue is going and how to get it back.

Transparency is essential to addressing this wide-spread problem and it cannot be achieved without constant communication between all members in a practice working together.

Data Solutions: Simple and Effective Ways to use data to make effective decisions

As communication increases within the practice and a dashboard has been generated to understand where revenue is being held, it’s important to consistently analyze these data points before implementing effective strategies to change.

  1. In the practice dashboard, display any denials currently outstanding. Make this section easy to locate, read, and understand, to continue transparency as the dashboard evolves. This can be done by sorting outstanding denials by patient, trended by payer, procedure, provider, and location.
  2. Next, look at how these trends change over time. As a practice, you need to know what is happening with these claims to understand any changes to revenue. Over time, practices will be able to establish different trends with this data.
  3. Then, create an A/R dashboard by payer by days outstanding, which is then organized by procedure, payer, provider, and location, down to each patient’s account. This same data should be applied to patients will full, open account balances where nothing has been paid. This dashboard would show only patient accounts that have not had a payment or adjustment tied to the patient’s date of service. The dashboard should reflect the amount of time that has passed since the balance was originally placed. This will allow better transparency to practices and will give the practice the opportunity to explore the root cause of these trends.

Different dashboards within a practice’s system can hold a multitude of information and allow for constant review. If staff regularly reviews the dashboards and monitors the system, it can greatly assist in transparency and communication, which will later affect a practice’s bottom line. As managers review the data flagged by regular staff, the practice will develop strategies to create effective change and more productive tactics.

There are many critical key performance indicators (KPIs) to watch and drive revenue optimization / performance in the practice. To start a simple plan which will cause big change, watch your KPI’s/dashboards and refocus your team.

Standard practice management system reports such as an open claim reports or denial management reports aren’t enough these days. As the healthcare industry changes, practices need to be on top of data to understand revenue fluctuations. Flexibility in data will present the information much more easily, regardless of the question asked.

If your practice needs more information on dashboards, transparency, and solutions, to lowering your A/R with minimal or no expense, connect with me via LinkedIn, email jmalloy@globalhealthmgt.com, or phone 888.610.2455 and I’ll guide your practice to success with in-house management skills, practices, and processes.

Author Bio:

Jim Malloy, CHBME, CEO & Managing Partner in Global Health Management Services, LLC jmalloy@globalhealthmgt.com 888.610.2455

Jim Malloy is a Certified Healthcare Business Management Executive specializing in increasing profit margins and reducing business concerns for healthcare practices and facilities. With Jim’s unique skill sets in healthcare technology and revenue cycle management, he’s able to create customized solutions for the healthcare industry. Many of Jim’s practice and ambulatory surgery center partners experience higher revenues per case and less policy and compliance issues, which allow each group to focus on their organization’s vision. His goal is simple: utilize the right mix of technology, process and people to help healthcare providers thrive in today’s ever-changing healthcare landscape. He has served on local boards, leadership teams and councils and is an active member of MGMA, Healthcare Information and Management Systems Society (HIMISS) and the Healthcare Business and Management Association (HBMA). He is also sought after for speaking engagements in healthcare revenue cycle management and for teaching healthcare administrators how data drives profit.

Similar Posts