Three Reasons to Cry about Your Medical Receivables Situation
During a recent meeting at a hospital one of the executives, the CFO, expressed concern that the hospital’s large backlog of accounts hadn’t been properly worked. He used the term “low-hanging fruit.” In his mind, there were tons of ripe receivables, sitting on low-hanging limbs, just waiting to be collected. Once the process of follow-up was begun, he felt there was the distinct possibility of a windfall with little effort involved.
Unfortunately, in the current medical receivables climate, there is very little outstanding that doesn’t require a major effort to turn into cash. Medical receivables are causing major headaches for hospitals and physicians right now. What are some reasons for this situation?
1. Insurance reluctance to remit:
We don’t have it in for insurance companies. They fulfill a very important function. It just seems that obtaining prompt remittances is a thing of the past. More and more provider employee resources have to be devoted to insurance follow-up. If the claim is incorrect, nonpayment would be appropriate. But too often there is not a valid reason for the insurance company not paying the claim.
2. Provider reluctance to commit adequate resources to properly handle accounts:
It’s no secret. If you have 10,000 outstanding accounts in your A/R, you need a minimum of five people dedicated only to working those accounts. That doesn’t include the clerical support to update addresses and properly maintain receivables. Most patients only receive a monthly statement. Calls may be made on selected large balances, but the majority of accounts go un-worked. Un-worked accounts mean larger allowances for bad debt. Most people would argue for increasing the return. Increased resources means increased return.
3. El Nino:
Have you noticed how El Nino has been blamed for so many bad things happening? Why not include monstrous medical receivables? If the weather gets nasty this winter, El Nino will somehow become the reason for they’re being so many large groups of un-worked receivables.
Seriously, if you are staring at an unmanageable, un-wieldy group of “ripe” receivables, think about how quickly they can become rotten. Smaller balance accounts are the hidden horror that many providers are finding lurking deep in their balance sheets. Call us for some ideas on managing that monster. It’s time to stop crying and start acting.
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