A receivable crisis (A / R) is slowly creeping up in most hospitals, although there is evidence that the revenue cycle is delayed and the division into workflow and processes is the number.
But it usually takes a unique event or development that proves once and for all that receivables are getting out of hand and that quick, quick help is needed to reduce A / R – and rejuvenate a marked A / R-process.
Signs you need emergency assistance?
There are many signs that point to the need for a concerted, targeted effort to identify aging receivables. That might be the most significant sign of when 28 percent or more of your A / R has gotten older than 90 days or more (a benchmark established by the hospital’s receivable analysis of statistical data related to the hospital’s receivables). Before you ever get to this point, however, look for other warning signs that your A / R is creeping up to an unmanageable state:
Your A / R accounts expire regularly.
Third-party insurance companies set deadlines for filing claims, and if you do not file on time, you will not get paid. If you do not submit on time or correctly, the amount of non-refundable refund will creep up to a “breaking point.”
Problems with cash flow.
You just turned the calendar and the end of the year is approaching and your cash flow is not where it should be – and your A / R days are 10-14 days higher than last year. This is the time you need to quickly, systematically lower your A / R and improve cash flow – not to mention improve your bond rating and show the hospital board that things are under control.
Computer conversions went wrong.
Switching to new software or even more involved in computer conversion creates havoc on receivables. Traditionally, A / R days span up to 10 outstanding days due to conversions and take a while to get back to pre-conversion levels.
Other important, yet less obvious, signs include: high staff turnover, increasing numbers of rejections, a breakdown in the patient registration process, and simply just a huge amount of unmanageable demands on the financial services staff.
Arming the A / R Swat team
Managing an A / R crisis must be fast, focused and managed by a pool of resources focused on accounts that are the source of the A / R crisis. In other words, tackling aging A / R should be a separate project and not add to the staff’s current workload. Here’s a step-by-step guide to lowering your A / R quickly:
1) Appoint the most experienced financial services patients to work on high dollar accounts.
2) Work aged accounts in descending dollar order.
3) Collect all prematurely filed accounts – decide which ones can be appealed, and most importantly, identify those who have little chance of payment and write them off.
4) Re-invoicing as many claims as soon as possible.
5) Work with large groups of accounts at the same time. For example, collect 50 accounts from the same payer, contact the payer and ask them about them all at once. Warning: do not work one requirement after another.
6) Take advantage of your vendor representative to help you get paid.
Although some of these steps seem obvious, most patients with financial services just do not have the resources to deal with an A / R emergency.
Focused A / R team pays off
Some hospitals decide to handle A / R emergencies themselves, but this is often difficult and unrealistic with existing workloads. Instead of outsourcing – and having to work with off-site staff on separate computers and systems – many hospitals choose to “in-source”, bringing a dedicated, professional team of patient financial experts and directors to work on spot and perform an A / R swat team approach.
Case in point
For Charles J. Santangelo, Executive Vice President / CFO of Susquehanna Health in Western Pennsylvania, in-sourcing was a boon in disguise as his department underwent a computer conversion that began to negatively impact A / R. Mr. Santangelo’s department decided they needed a 6-person Expeditive team to come in and handle a massive A / R cleanup. Eight months later, not only was A / R under control, but cash flowed not just but gushing.
“The results produced by the efforts of Expeditive and our patient account team were that Susquehanna Health Hospitals collected $ 18.7 million targeted A / R throughout the project. Employees were professional, friendly and worked well with Susquehanna Health Patient Accounting staff, “says Mr. Santangelo.
In the course of the effort, the senior executive worked with Mr. Santangelo for keeping him abreast of progress; weekly and monthly reports showed money coming in, accounts being settled, and detailed A / R summary of payer and falling balance.
Stop wheel spinning
As A / R ages to the point of no return, hospitals have to recover cash quickly and work down aging receivables. Hiring a “swat team” with sourcing allows CFOs and directors to oversee an A / R operation that can quickly get into the system, solve laser focus problems and come out with more money in hand and a rejuvenated and improved revenue cycle.
Tips to move on
Once you hire a “swat team” to deal with uncontrolled A / R, your department may be working on more long-term issues to lower its receivables, such as:
Develop job helpers and scripts for employees to resolve key accounts (immediately).
Install daily work drivers, which are reports that are provided to all your follow-up employees, showing outstanding accounts and a time frame to resolve.
Always put your most talented and experienced staff on the highest dollar accounts.
Have the management review the results for follow-up work in the process.
Train employees (account monitoring staff also need to know which accounts to focus on).
Establish work volume and quality goals.
Strongly track the collection of all A-R over 45 days.