How Multi-Site Healthcare Organizations Can Reduce Accounts Receivable Days Without Adding Billing Staff
See how multi-site healthcare organizations improve Accounts Receivable Days, speed up payments, and support growth without adding billing staff.
Healthcare multi-sites are in a special situation. Patients grow in volume at sites. Revenue increases. But, Accounts Receivable days are still stubbornly high. The response naturally is to hire billers to deal with the increased workload. However, more staff is not always the answer. Often it just adds cost but does not provide a performance gain. If your business is multi site, you need to take a different approach. One that’s efficient, technology and standardization. This guide offers a blueprint for healthcare CEOs to implement AR optimization at several sites, all through headcount reduction.
The Multi-Site AR Challenge
Multi-site practices have additional complexities that are not experienced by single-location practices. The processes may vary based on the location. Training of staff is different at different sites. Payer mix differs across geographic areas. The system integration is more complicated. Oversight is more difficult if spread out across several facilities. All these factors pose major issues in the management of revenue cycles.
If there is more volume of patients, but less cash flow, then something is wrong in the revenue cycle. Claims are being filed and not trying to be collected. Despite the uptick in revenue, AR days are still elevated. The organization is working more but not getting the return in money.
The Multi-Site Complexity
Multiple locations have complexity that impacts on the AR process at all stages. Registration procedures may vary. The process of verifying eligibility may vary. It may be difficult to keep track of authorizations. There is generally no standardization of denial management. And payment posting may be done manually at each site. This complexity gives rise to cascading problems. Denials are the result of inconsistent front end processes. Inconsistent denials increase collection time. Manual payment posting creates payment delay and delays cash visibility. Also, if the systems are fragmented, it will be hard to monitor performance throughout the organization.
Why Accounts Receivable Days Matter More for Multi-Site Organizations
AR days are a measure of how fast an organization is able to turn services into collected revenue. This is particularly important for multi-site health care organizations. Every day in AR is cash locked across all locations. A $100 million company with 45 days of AR can unlock about $2.7 million in working capital by dropping to 35 days of AR.
The Financial Impact of AR Days
| Annual Revenue | Current AR Days | Target AR Days | Cash Released |
|---|---|---|---|
| $50,000,000 | 50 days | 35 days | $2,054,000 |
| $100,000,000 | 50 days | 35 days | $4,109,000 |
| $250,000,000 | 50 days | 35 days | $10,274,000 |
The Cost of Inaction
Businesses with poor A/R days will deal with a range of repercussions. Cash flow turns into a danger. Working capital is limited. Investment capacity is lowered. And its financial flexibility is restricted. Every day of delay is a day that will cost money to invest in growth, technology or staff retention.
Root Causes of High Accounts Receivable Days
The first step in reducing accounts receivable days is to determine the cause of the high days. Organizations with multiple sites have a number of typical causes.
| Root Cause | Impact on AR Days |
|---|---|
| Inconsistent registration across locations | +5-10 days |
| Fragmented technology systems | +5-8 days |
| Inefficient denial management | +8-15 days |
| Manual payment posting | +3-7 days |
Inconsistent Front-End Processes
Errors rise where registration and eligibility verification and authorization are different at each site. Claims are rejected. Denials occur. And collection periods are extended as staff tries to correct preventable errors. For multi-site organizations, this is one of the areas that needs attention to enhance AR performance.
Fragmented Technology Systems
Many multi-site organizations have disjointed systems. Various locations have various EHRs, billing systems, or payment processors. The resulting data silos make it challenging to monitor accounts receivable performance throughout the organization.
Inefficient Denial Management
If denials are not resolved quickly, the accounts receivable days increase. Denial management is a challenge for multi-site organizations, where there are variations in how denials are managed across locations. It is said that some denials are never appealed. Some are called on sometimes and others on other times.
Manual Payment Posting
Delays in reconciliation from manual payment posting. If payments are not posted in a timely manner, cash visibility is postponed. And collection periods lengthen. Payment posting automation results in faster cash flow.
Standardize Front-End Processes Across All Locations
To decrease the days outstanding in the A/R’s, consistency is paramount. All front-end processes need to be uniform throughout all locations. With consistent front-end processes, there are fewer errors and better revenue cycle performance.
The Financial Impact
Denials for registration are 20-30 percent less when front-end processes are standardized. This improvement reduces accounts receivable days by 5-10 days. This translates into $1.3 million to $2.7 million of cash released for a $100 million organization.
Key Actions
Automate Eligibility Verification: Denials that occur during registration are eliminated with real-time eligibility verification at scheduling and check-in. Organizations with automated front-end processes report many less denials and quicker cash flow.
Standardize Registration Protocols: Registration of patients should be consistent in all locations. Standardized procedures guarantee patient information is collected uniformly across locations. This eliminates those collection errors that prolong collection periods.
Centralize Prior Authorization: Prior authorization management should be centralized to ensure consistency. Authorization status and expiration dates are monitored and managed centrally for all sites. This will eliminate authorization-related denials that will slow payments.
Leverage Analytics for Real-Time AR Visibility
When companies have instant visibility of their accounts receivable performance, they can pinpoint problems before they become major issues. This visibility is given through analytics platforms.
Dashboard Metrics
| Metric | What It Reveals |
|---|---|
| AR by Location | Which sites are underperforming |
| AR by Payer | Which payers create the most friction |
| AR by Aging Bucket | Where cash is tied up |
| AR by Provider | Documentation gaps affecting revenue |
Key Actions
Implement AR Dashboards: Real-time dashboards show revenue cycle performance via location, by payer, by aging bucket. These dashboards allow proactively managing cash flow.
Monitor Location-Specific Performance: Understanding where performance isn’t up to scratch identifies underperforming sites. This helps reduce the need for improvement and quicken cash flow improvement.
Identify Outliers: If there are high AR days in areas that are not flagged, the areas should be addressed immediately. Identifying problems early on can preemptively stop them from growing into larger problems.
Automate Denial Management Workflows
One of the biggest contributors to high accounts receivable days is denial management. Automation of denial management workflows helps to speed up resolution times, and enhance accounts receivable.
The Financial Impact
Automated denial management saves 8 to 15 days in accounts receivable days due to denials. It increases recovery by 20-40%. And it eliminates the cost of manual rework. That’s $2.1 million to $4.1 million in cash freed up for a $100 million organization.
Key Actions
Track Denials by Root Cause: Denials should be sorted by Root Cause. This allows for targeted prevention measures to lower denials and support better revenue cycle performance.
Prioritize High-Value Denials: Denials should be prioritized by dollar value. Denials for high dollar items are prioritized to get them looked after, which boosts recovery rate and decreases collection time.
Implement Automated Appeals: Automated appeals streamline the denial resolution process. Claims are appealed on an ongoing basis and in a timely manner, which helps to speed up cash flow.
Accelerate Cash Application and Payment Posting
Manual payment processing leads to delays in revenue reconciliation. Fast cash application reduces the AR days and enhances cash flow.
The Financial Impact
Time for cash application is reduced by 50 to 70 percent through automated cash application. It shortens the days in which accounts are due by 3-7 days. And it enhances cash flow transparency. The amount of cash released for a $100 million organization is $800,000 to $1.9 million.
Key Actions
Automate Payment Matching: Payment matching automates the process of matching payments with open invoices. This saves time and effort, and speeds cash application. Other organizations use automation to ensure that they post the same day.
Implement Real-Time Reconciliation: Real-time reconciliation offers real-time cash flow visibility. Organizations can detect discrepancies and resolve problems quickly and enhance accounts receivable performance.
Reduce Unapplied Cash: Automated cash application will reduce unapplied cash. Payments are matched with invoices correctly, enhancing accuracy of accounts receivable and days.
Technology Solutions That Reduce AR Days Without Adding Staff
Technology is a big part of the solution in reducing A/R Days without hiring anyone. The right solutions can slash manual effort and speed up revenue collection.
Revenue Cycle Analytics Platforms
Revenue cycle analytics applications give real-time visibility of accounts receivables performance. Those operating analytics platforms can easily identify missing collections and denial issues before they start having a major effect on cash flow.
Automated Cash Application
Automated Cash application greatly minimizes the amount of days in accounts receivable. A multi-site healthcare organization cut processing time by 33% with its automated bill validation, approval, and cash application with ERP. Automated workflows allow companies to get postings to books the same day, complete reconciliations more quickly and ensure smoother cash flow.
Integrated RCM Solutions
Integrated revenue cycle management solutions tie together front, mid and back office processes. An integrated RCM solution led to one 95 provider health center cutting days in accounts receivable by over 50 percent. The solution automated routine tasks and streamlined the revenue collection.
Standardization Technology
Multi-location practices can benefit from technology platforms that support them with standardization of operations throughout the sites. The digital forms, uniform payment requests and centralized reporting allow uniform processing of all locations, which enhances the performance of accounts receivable.
Building a Culture of AR Accountability Across Locations
The only way to reduce accounts receivable days is through technology, not human effort. A culture of accountability for revenue cycle performance needs to be established among organizations. As teams become responsible for accounts receivable, results are enhanced.
Set Clear Goals:
Set specific AR goals for the business and by location. Make sure to express these goals explicitly to all pertinent teams. Wavering goals lead to confusion and lack of accountability.
Establish Accountability:
Establish clear ownership of the accounts receivable performance. There needs to be a single person in each location accountable for monitoring and improving A/R performance. Accountability drives action.
Report Consistently:
Report on AR regularly to all appropriate teams. Adds location, payer and aging bucket performance. Utilize dashboards to have real-time visibility. Reporting leads to improvement.
Recognize Improvement:
Celebrate revenue cycle performance improvement. The recognition process has the effect of elevating the value of RCM and providing motivation for improvement. Those teams that have been recognized for cash flow improvement keep working.
The ROI of Reducing Accounts Receivable Days Without Adding Staff
A big impact on finances when the days of accounts receivable are reduced. These strategies are implemented in organizations and provide measurable returns.
| Annual Revenue | AR Days Reduction | Cash Released | Staff Cost Avoided |
|---|---|---|---|
| $50,000,000 | 15 days | $2,054,000 | $150,000 – $300,000 |
| $100,000,000 | 15 days | $4,109,000 | $300,000 – $600,000 |
| $250,000,000 | 15 days | $10,274,000 | $750,000 – $1,500,000 |
Beyond Cash Release
While cash release is a benefit of reducing AR days, there are others. Companies that streamline revenue cycle performance benefit from better investment opportunity, lower borrowing expenses, and better financial flexibility. They also enjoy a competitive edge because of their better financials.
How Billing Care Solutions Supports Multi-Site AR Reduction
Billing Care Solutions offers full-service healthcare revenue cycle management solutions created for multi-location healthcare organizations. We leverage front-end standardization, analytics-informed visibility, automated workflows and clear reporting.
Our AR Reduction Services
| Service Area | What We Deliver |
|---|---|
| Front-End Standardization | Consistent registration, eligibility verification, and authorization processes across all locations |
| Analytics and Reporting | Real-time dashboards tracking accounts receivable performance by location, payer, and aging bucket |
| Denial Management | Automated denial workflows with root-cause analysis and prevention strategies |
| Cash Application | Automated payment matching and reconciliation for faster cash visibility |
| Centralized Oversight | Single point of accountability for accounts receivable performance across all locations |
What We Deliver
- Faster AR Reduction: Standardized processes and automated workflows speed up the AR reduction process.
- Consistent Performance: Standardized processes for revenue cycle across all locations.
- Better Cash Flow: Faster collections, better cash flow, better working capital.
- Lower Administrative Costs: Automation reduces the need for additional billing staff.
- Improved Visibility: Real-time reporting provides transparency into revenue cycle performance across all locations.
Conclusion
There is no need to hire billers to reduce AR days at multi-site health care organizations. It takes strategic planning of the front end, visibility through analytics, automated workflows and accountability. But companies that put these strategies in place can achieve better cash flow and greater financial resilience without hiring more people on board.
| Dimension | Current State | Optimized State |
|---|---|---|
| AR Days | 45-60 days | 30-35 days |
| Cash Flow | Constrained | Optimized |
| Staffing | Reactive | Efficient |
| Visibility | Limited | Real-time |
Billing Care Solutions is here to help if you are ready to cut down your organization’s accounts receivable days across all your sites. Give us a call today for an in-depth evaluation.
Frequently Asked Questions
The most difficult challenge is the lack of consistency in processes at multiple locations. With no standardization, errors rise and AR days are not abated even in the face of volume expansion at every site.
A 15-day AR day reduction translates to $2 million per $50 million in annual revenues. The effects of the cash impact are very real and immediate on your organization.
Yes, automation and analytics save time and speed up cash flow. Automating processes to achieve faster AR reduction, while not adding more people.
First, measure the current AR days and determine the cause of AR days. Before taking any action, learn where your cash is “locked up”.
If denials are not overcome quickly, they can create a long AR period. This is prevented and speeds up the resolution of outstanding claims with automated denial management.
Best in class organizations have AR days under 35. The score is above 45 days, which means there are a lot of revenue cycle gaps that demand attention.
For most companies, it takes 60-90 days to make a measurable difference. Full optimization generally takes 3-6 months to completely transform.
Monitor AR days, AR by aging bucket, AR by payer and AR by location. These indicators are a key to identifying the cash’s “traps” and where to target.
Denials downstream are extended due to front-end errors. These delays do not occur with accurate registration and verification.
Billing Care Solutions offers front-end standardization, analytics, automated denial management, and automated cash application to decrease AR days without adding employees.
