If you manage the revenue cycle for a small practice exclusively with in-house staff, it is rare that the resources assigned to managing your accounts receivable (A/R) can be fully dedicated to that task, which is critical to the financial health of your practice. These resources usually have other responsibilities associated with the busy pace of a healthcare practice and the need to ensure a pleasant experience for your patients.
In our prior post we discussed the costs that need to be considered when evaluating the financial impact to your practice of managing your receivables with your own staff. In this brief, we will unpack some of the opportunities to increase revenues by partnering with a professional provider of A/R services. The underlying assumption is that an outsourced, professional billing service is focused exclusively on the task of making sure that the practice is collecting maximum reimbursement for its services, without the distractions and interruptions that are always present in a busy healthcare practice. How can this impact your cash flow and profitability?
Reducing claims in denied or rejected status - Some practices have dozens or even hundreds of claims that have been denied or rejected, totaling tens of thousands of dollars in uncollected revenue. This would never happen with a reliable partner -- dedicated, repeatable processes can minimize errors up front, and problem claims are followed up on, corrected, and resubmitted or appealed promptly. With the right service partner, you should never have more than a handful of claims in a rejected or denied status.
Reducing aging - No less than 60% of your receivables should be in the 0-30 days outstanding "bucket", and very little, if any, should exceed 120 days. The older the receivable, the more difficult it becomes to collect, and most patient balances that exceed 90 days never get collected. A professional, reliable, dedicated service will submit claims promptly, follow up on unpaid claims regularly, assist your practice with patient statements and collections, and ensure that your receivables are collected in the minimum number of days.
Secondary and tertiary payers - For patients with secondary coverage, does your practice have discipline around submitting balances to secondary and even tertiary payers after payments are received from primary insurance? Failure to do this results not only in lost revenue, but can also result in patients getting billed for amounts in excess of their responsibility. Situations like these can result in lost revenue and a poor experience for your patients.
Coding analysis - Have you reviewed your most frequent procedure codes to ensure that you are getting the maximum reimbursement for the procedures and services that you are performing? If you perform procedures hundreds of times per year and are not coding these optimally, the revenue leakage can be material.
Ongoing reporting and analysis - A professional practice management service will review the data associated with your claims, your patients, your procedures, and the payers you contract with, and will be able to offer data and insights that can steer your practice towards greater profitability.
More time for patient care - Freeing your staff from managing all aspects of the revenue cycle enables them to spend more time focusing on the experience and care provided to patients. This can drive greater patient satisfaction, reduce churn, increase referrals, and even allow more time within your weekly calendar to see more patients. This translates into more revenue for your practice.
When you combine the impact of the in-house staff costs reviewed in our last post with the opportunities to improve revenues discussed here, the financial benefit of working with a reliable, consistent, and professional service to optimize your A/R suggests that an outsourcing arrangement deserves strong consideration.