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9 Most Common Medical Accounts Receivable Problems and How To Fix Them?
Well, A good accounts receivable management can transform the medical business cash flow from negative to positive. So to keep the AR process seamless follow the tactics mentioned in this blog.
Does your healthcare firm have improper cash flow, due to poor account receivable management? Well, this isn’t an unusual issue. The accounts receivable problem has plagued healthcare accounting, that is hindering the objective and goals of the hospitals.
Here are some of the common accounts receivable problems and their solutions, to stay consistent:
1. Denial of Insurance Claims
One of the most predictable accounts receivable problems is denied insurance claims. According to a survey by the U.S. Government Accountability Office (GAO), healthcare firms can lose about 10% of potential profits if their denial management process is inadequate. As per the Medical Group Management Association (MGMA) report, every healthcare firm should have a denial rate of 4%.
Solution – Your team of accounts receivable management must precisely review each and every claim form prior to submission so that it can meet the guidelines and try to keep a follow-up of denied claims. You must investigate the denied claims and determine what needs to be submitted.
2. Unnecessary write-offs
Mostly the team of accounts receivable management, does not maintain those payments that are less in amount. This eventually affects the balance sheet of the hospitals. Because there are some patients who are willing to make payments in installments or will work with you to reduce their medical debt.
Solution – The team must approve and review each and everything before they write-off, whether the amount is more or less, everything must be maintained in the books of accounts. In this way, you can ensure that your business is not going towards loss.
3. Bad Debts
Increasing bad debts has become one of the most common problems in medical accounts receivable management, whereas the patient’s responsibility contributes more than one-quarter revenue of the healthcare industry. Earlier patient’s responsibility was only at the time of service, but now this is not sufficient. To collect the payment from the patient during the entire revenue cycle is critical.
Solution – Your healthcare firm must gather all the necessary billing and insurance information before providing the service and calculate the expected cost they need to pay out of the pocket. So by verifying the coverage, insurance bills, the patient already understands and agrees to their responsibility.
4. Collection Culture
Collecting payments is not a cup of tea of healthcare professionals, as their work is to provide quality service to their patients. But getting paid for the service rendered is essential to maintain a successful practice and continue to provide care. Do you need to find out, if you have a good collection culture?
Solution – In order to make your account receivable your priority, your healthcare firm must foster a culture of collecting payment. You must provide your team the right tool for collecting payments so that even your patient does not get disappointed by the service.
5. Lack of Account Receivable Management
Improper account receivable management in medical practice can lead the healthcare firm towards loss that includes bad debts and poor experience of patients. Moreover, you can analyze increasing bad debts in your books of accounts.
Solution – You must properly reconcile your bank statements to verify that all the transactions are accurate and you have not missed any entry. This will help you to prevent the fraud and errors so that you can effectively focus on your patients and cure them.
6. Restricted Mode of Payment
When you keep only one mode of payment says, the patient can only make cash payments, it somewhere affects your balance sheet. This becomes a hurdle for you to collect the payment.
Solution – Your healthcare firm should keep various modes of payments such as accepting payments via debit or credit card, in order to maintain smooth cash flow.
7. Ask your patients to pay at the time of service
According to the American Medical Association (AMA), a provider has many opportunities to educate their patients about their financial policies and responsibility, so that they can reduce their account receivable problem to an extent
Solution – There are 9 ways to educate your patient:
1. Appointment Scheduling
2. Provider Web Site
3. Welcome letter
4. Insurance Verification
5. Appointment Reminder
6. Patient Check-In
7. Patient Check-Out
8. Claim Processing
9. Appeal Letter
At each point of the process, the payment policy, payment method options, and outstanding balances should be clearly stated to the patient. This education can help you to manage your condition patients.
8. Select the Right Process
Every healthcare firm differs from each other and so are their methods of collecting payments. For example, two hospitals look similar from outside, but they will be having different staff, patient demographics, account dispositions and information system capabilities that enable them to decide which collecting process is viable for their hospital.
Solution – You must understand what is your process and which situation you might go through, on that basis; decide which collecting method will suit your healthcare firm.
9. Unmotivated Staff
From doctors to administrative staff, every individual of your organization should be passionate about their work and understand your mission and objectives. If your staff is not working properly or not taking your goals on a serious note, you can observe its negative impact on your healthcare firm.
Solution – The best solution is to take advantage of accounts receivable services to a reliable firm, who are experts in the industry and will vigorously work on your requirements. Hiring a first-class administrative staff is not easy and is a costly affair, whereas if you outsource your healthcare accounts receivable you get access to advanced technology and reliable services.
The healthcare industry is complex and managing various tasks is not easy. So, I would conclude with a saying of a famous American Entrepreneur Jim Rohn, “ You must either modify your dreams or magnify your skills”.
Cogneesol is an expert in the outsourcing industry and can be your best choice if you are looking forward to achieving a streamlined Accounts Receivable process. Contact Us for cost-effective and efficient services!
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