But, it usually takes some singular event or development that proves, once and for all, that receivables are getting out of hand and immediate, quick help is needed to reduce A/R - and rejuvenate a flagging A/R process.



Signs You Need Emergency A/R Help?

There are many signs that point to the need for a concerted, focused effort to work down aging receivables. Perhaps the starkest sign of all is when 28 percent or more of your A/R has aged more than 90 days or greater (a benchmark set by the Hospital Accounts Receivable Analysis report on statistical data related to hospital receivables). Before you ever get to this point, however, look out for other warning signals that your A/R is creeping up to an unmanageable state:

Your A/R accounts are timing out regularly. Third party insurance carriers set deadlines for filing claims and if you don't submit in time, you won't get paid. If you don't submit in time, or properly, the amount of unclaimed reimbursement will creep up to a "breaking point." Cash flow problems. You've just flipped the calendar and year-end is nearing 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 gone awry. Switching to new software or even more involved computer conversions wreak havoc on accounts receivable. Traditionally, A/R days spike up 10 A/R days outstanding due to conversions and take awhile to come back down to pre-conversion levels.

Other important, yet less blatant signs include: high staff turnover rate, growing number of denials, a breakdown in the patient registration process and simply, just an immense volume of unmanageable claims for the patient financial services staff.

Arming the A/R Swat Team. Handling an A/R crisis should be swift, focused and handled by a pool of resources that are 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 added to the staff's current workload. Here's a step-by-step approach to quickly lowering your A/R:

1. Appoint the most seasoned patient financial services professionals to work on high dollar accounts.

2. Work aged accounts in descending dollar order.

3. Gather all untimely-filed accounts - determine which ones can be appealed and most importantly, determine those that have little chance of payment and write them off.

4. Re-bill as many claims, as quickly as possible.

5. Work with large groups of accounts simultaneously. For example, gather 50 accounts from the same payer, contact the payer and ask them about them all at once. Caution: don't work one claim after another.

6. Leverage your provider representative to help you get paid.

While some of these steps seem obvious, most patient financial service departments just don't have the manpower resources to handle an A/R emergency.

Focused A/R Team Pays Off. Some hospitals will decide to manage A/R emergencies themselves, but this is often difficult and unrealistic with existing workloads. Rather than outsourcing - and having to work with off-site staff on separate computers and systems - many hospitals opt to "in-source," bringing in a dedicated, professional team of patient financial services experts and directors to work on-site and execute an A/R swat team approach.

Stop Wheel Spinning. When A/R ages to the point of no return, hospitals need to recover cash quickly and work down aging receivables. Hiring an in-sourced "swat team" allows CFOs and directors to oversee an A/R operation that can quickly get into the system, resolve issues with laser focus and get out with more cash in hand and a rejuvenated and improved revenue cycle.

Tips for Moving On. Once you've employed a "swat team" to handle out-of-control A/R, your department can work on more long-term issues to lower accounts receivable, such as:

1. Develop job aides and scripts for employees to help them resolve key accounts (promptly).

2. Institute daily work drivers, which are reports given to all of your follow-up staff, showing outstanding accounts and a time frame in which they should be resolved.

3. Always put your most skilled and experienced staff on the highest-dollar accounts.

4. Have management review performance on follow-up work in process.

5. Prioritize work.

6. Train employees (account follow-up staff should also know which accounts to focus on).

7. Establish work volume and quality goals.

8. Vigorously pursue the collection of all A-R in excess of 45 days.

Copyright (c) 2008 Jim Yarsinsky