These days there are all sorts of statistics that healthcare professionals are trying to rely on in trying to figure out how well their
receivables are performing. It seems that knowing your days in receivables, and your overall AR, are no
longer sufficient enough to know how well or poorly things are going. It seems as though most of your time is spent learning ways to calculate
some minor statistic using a geometric formula that would have scared
I'm sure these statistics must have some validity somewhere; otherwise no one would have ever come up with them. Personally, I feel that
taking the time to calculate numbers that mean nothing to you by a chief financial officer or vice president of finance, who probably has no
idea what you or your department go through on a daily basis, is utterly time consuming, and usually useless in what billing folks need to get
the job done.
We're going to look at some real statistics that business office personnel need to concentrate on in order to try to get a handle on their
receivables, as well as to find new ways to possibly generate extra cash.
- Percentage of AR over 90 days. This is the biggest area in determining just how well your business office is running. Overall, you're
hoping the percentage of dollars over 90 days is 30% or less. After saying that, there are some more specific things to look at. Medicare pays quick if
claims are clean, so if your outstanding claims over 90% are more than 10% on inpatient or 25% on outpatient, you have major issues. On
you'll be lucky to have your percentage over 90% at least around 50%, because so many claims get controverted. In general, though, your insurances that
are more often primary should have lower aged balances than your insurances which are often secondary. Self pay is the wild card because most systems
will show self pay claims over 90 days even if the financial class has just been changed on a claim way older. However, if all else went well, those dollars
shouldn't be all that high, and if they are then you might have a problem in getting your self pay claims to collection.
- Inpatient vs. Outpatient receivables. Inpatient receivables are the easiest to collect, even if the claim amounts are much higher
than the outpatient claims. Thus, they're also the easiest to track. If your registration process is thorough
you should be getting at least 95% of your inpatient claims paid with the very first bill submission. Your total days in AR should never be
higher than 30 for inpatient claims, and hopefully you keep them around 15-20 days most of the time. For most facilities in today's
world, Medicare should be your highest AR total balance and percentage of inpatient AR, but you should still
be able to keep your AR over 90 days under 25%.
Outpatient claims are a slightly different story. Because there's so many of them, and of so many different varieties, there are more
chances for errors, both intentional and unintentional. Most facilities strive to get 90% of all claims paid upon first bill submission. Your
days in AR should never be higher than 50, and hopefully you're able to keep them between 30 and 40 most of the time. As I said before,
the range is wider because there are more claims, and each facility has something different to deal with. If your population is heavily into
managed care, you have a better opportunity to keep your days lower than if you're mainly a commercial carrier hospital. If you're heavy
into Medicaid, your overall AR might look high, mainly because many patients are either waiting for Medicaid
numbers or waiting to get approved by Medicaid, and often your first claim may not go out for as long as 90 days.
- Number of claims per representative. Every national standard that addresses this issue agrees that your account representatives
are most effective when they have less than 2,500 claims to work on, even better if your organization can support enough people to keep it
closer to 2,000. If your billing office is split up based on insurance type, you'll have more difficulty keeping a handle on this one. Not only
is there the problem of insurance jurisdiction (primary vs. secondary) as its own consequence, but if account representatives are the
same everywhere you have to deal with the issue of someone looking at an account, determining they shouldn't have it because it belongs in
a different financial class, and just changing it without any notes or notice to the person who now inherits the account. If you have an
alpha split office you at least have a better idea of just how many claims each person is actually responsible for.
This isn't a static statistic either, however. Just because your representatives may have more claims than what's recommended doesn't
mean that you necessarily need more staff. You need to make a determination first as to how efficient your staff is actually working, as well
as other issues that may have a negative impact on your claims. For instance, are payments and allowances current? Have your accounts that
should be in a self pay status been transferred to that class? Were there any new services added, or any unusual activity, which has skewed
the number of claims that need to be addressed? There are just a few items of note; there are plenty more to consider, based on your normal history.
One final thing; don't include your self pay accounts in with your overall number of accounts, unless your representatives also work those claims.
- Cash. No one will care what your AR is, for awhile anyway, if you can not only keep your cash consistent, but find ways to increase it.
Cash ebbs and flows with revenue; sometimes we forget that, but often chief financial officers don't even consider it. So, some month's cash will be
lower because revenue was lower 60 days earlier; sometimes higher because revenue was higher. If you can find ways to overcome these fluctuations
and increase cash you'll be hailed as a genius.
I gave some tips on how to get cash quickly in another article. Though those are good to go back to from time
to time, it's better to find a consistent winner for bringing in new cash, or at least maintaining a high level of incoming cash. Getting claims out
faster is one thing. Working certain financial classes sooner than others is another. Moving your claims from primary to secondary insurances
in a timely fashion, then billing those secondary claims is a third. Processes need to be formulated, possibly written, but definitely taught.
Everyone needs to be on the same page. You as the manager needs to know that your staff understands where their priorities are, what will bring
in the most cash, and what can wait until a better time.