Today, many healthcare companies have turbulent cash flow. Even before the COVID-19 pandemic, revenue cycle management had been challenging for medical groups. Since cash flow is essential to any company’s success, owners and managers incorporate best practices in collections and payments in their strategies.

What Makes Good Cash Flow for Healthcare Companies?

If patients pay on time, they are more likely to schedule routine appointments. Check if your system enables prompt payments or rewards patients who do. Conversely, delinquent accounts have a daily depreciation rate of 0.5%, making you lose 15% of the value of your accounts receivable every month.

One of the most significant assets of a medical office is its accounts receivable. If your billing and collections systems are the same as five years ago, you should consider implementing revenue cycle changes. It is easier said than done, though; medical companies face several hurdles when revamping their RCM processes.

Healthcare Companies Tend to Move Slower

Other types of companies can employ aggressive tactics to ensure that they get paid on time. If someone goes past the due date on their cellphone bill, they automatically receive reminders from the telecom service provider. Healthcare groups don’t typically deliver more than one statement a month, or more than one phone call every 90 days—unheard of in commercial businesses. Since healthcare companies do not use more rigorous tactics, people de-prioritize paying for their bills.

Patients Are Paying Higher Bills

One reason for patients putting off payments could be the increase in the rates for the copayment. About 13 years ago, patient responsibility only amounted to 12% of a healthcare practice’s total revenue. Currently, patient responsibility represents roughly 30% of all healthcare reimbursements, a 250% increase, and even more staggering, making it the third largest payer behind Medicare and Medicaid.

Although healthcare companies have systems for collecting patient balances, it does not guarantee timeliness. There are accounts of patients refusing to pay their portion or negotiating the pricing for services, especially if they had lower copays.  Did you know, it is estimated that 95% of patients are expected to fail in fully paying their medical bills in 2020.  In 2016, it was estimated at 68%.

Insurance Reimbursements Are Plummeting

Another factor affecting revenue cycle management is the decrease in insurance reimbursement rates. Historically, insurance payments comprised 80 to 95% of a practice’s revenue. Insurance reimbursements are getting smaller, forcing today’s groups to focus on patient responsibility more than ever just to keep revenues the same.

It Costs More to Run a Practice Today – Adapt and Adopt Technology to Course Correct

New technology brings better service, but it also means rising operating costs. Medical groups must keep their equipment up-to-date and stay competitive with other groups and clinics.  To many groups invest in improving patient care with better technology and equipment, but few take that extra step to invest in their revenue streams as well.  Why do groups constantly invest in new medical equipment, but not keep up with the technology and better services to manage their revenue?

The healthcare industry is becoming more complex every year, and the traditional collections strategies might no longer work. A healthcare company would improve its processes for following up slow-paying accounts by leveraging tools and techniques to compete with commercial businesses.

Consider finding an RCM Partner

Keeping your cash flow healthy means being prompt in following up on slow-paying accounts. You must identify and intervene as early as possible, and it’s vital to leverage the latest technology and services that would maximize your revenue streams.

At Credence Global Solutions, we empower financial transformations with innovative revenue cycle solutions through built-in technology that works in conjuction with your current in-house systems. We handle more than $100 billion in managed assets supporting providers and healthcare organizations across the nation to enhance their revenue streams. Let us secure your company’s growth; contact us today to learn more!