How to develop an accounts receivable work plan in three steps
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Thinking of selling your practice? Looking to be acquired by the hospital? Merging with another group? If you’re contemplating any of these scenarios, it’s time to clean up the accounts receivable (A/R). And even if you’re not, routinely cleaning up the A/R is a sound business practice.
Develop an A/R work plan in three steps.
1. Assess the situation.
First, generate an aged accounts receivable report that segregates patient A/R from insurance A/R. Create the workplan to initially focus on A/R > 90 days old. Review the breakdown of accounts by dollar amount. For example, a sample patient A/R > 90 days revealed the following:
2. Take care of the “low hanging fruit.”
Psychologically, it’s important to accomplish even small goals. Using the report above as an example, first focus on the accounts under $25. Use automated features in the billing system to write off patient balances under $25 to internal collections. As a general rule of thumb, send one statement so the patient is informed of the balance. If they don’t pay within 30 days, write off the balance, but, flag the account to collect if the patient returns to the practice.
Next, focus on the small number of high balances. In the example above, 44 accounts represent 44 percent of the total balance. Review those accounts before tackling the higher volume of lower dollar accounts.
3. Parcel the work in manageable pieces.
Tackling A/R can feel like a daunting task, even for the most seasoned of teams. In order to set deadlines and milestones, determine how long on average it takes to work an account. For general planning purposes, budget five minutes per account. It’s also important to parcel the work in manageable pieces. For example, rather than focusing on 200 accounts that would take approximately 17 hours to complete, focus on 50 accounts that takes just over 4 hours to complete. Set daily goals along with weekly goals.
One major challenge in cleaning up A/R is balancing the current workload with the old A/R. In these instances, consider allowing overtime to get the old work complete while maintaining current workload. Hiring temporary staff is certainly an option, but it can be challenging given that the people working A/R need to be experienced and knowledgeable about your specialty and billing system.
Cleaning up A/R likely will yield in additional payments, so the additional time and resources devoted to this activity should pay for itself in 30-60 days.