Ask the Experts
Your Fiscal Check-Up for Receivables Management
Hospitals should perform an “annual check-up” of their receivables management departments in order to ensure the integrity of processes, performance, and workflow. The “health” of this department has a dramatic impact on the fiscal health of the organization. Preventive maintenance translates into optimized billing, faster payment, compliance with regulatory requirements, and reduction in lost charges.
The activities of the receivables management department are critical success factors to achieving the hospital’s revenue and reimbursement targets. Today, this department has a wide range of responsibilities:
- Administering requirements of managed care contracts
- Addressing and complying with regulatory requirements
- Maintaining diplomatic ties with third party payors
- Verifying patient demographic and insurance information
- Coordinating with utilization management
- Helping patients manage increased liability for payment
Many hospitals become so involved in complying with day to day challenges that the compound effects of small issues go unnoticed. It takes only a moderate change in contracts or federal regulations to become aware that staff and processes are stretched to the breaking point. And with the shortage of trained and knowledgeable receivables professionals, can your hospital survive turnover in this area that facilitates cash flow?
Does your organization have one or more of these symptoms?
- Increasing days in accounts receivable
- Increasing bad debt expense
- Increasing staffing costs due to rework and customer service
- Increasing collection agency costs
- Increasing compliance issues
- Increasing customer service complaints
- Decreasing margin
If your hospital is experiencing any of these symptoms then a comprehensive review will likely uncover an assortment of process, workflow, and performance issues.
What to Expect During Your “Check-Up”
The process analysis will identify how you are handling day to day activities of the department and highlight the processes and procedures currently in place. This will help you evaluate what’s working, what needs updating, and where new processes are needed.
A detailed mapping of the flow of daily work will identify “roadblocks” that hinder the smooth, efficient progress through the system. Roadblocks are then redesigned to fit the process, allowing staff to perform to their highest ability.
Using benchmarks and industry standards, the performance evaluation will identify the level at which your staff operates. In many cases, just-in-time training can help eliminate important knowledge deficits without causing traumatic staff turnover.
These three aspects are reviewed simultaneously to take into account the cross effects of process, workflow, and performance. For example, a workflow roadblock may be preventing an associate from being productive, while that same roadblock may be the result of an outdated process.
Expected Outcomes of Your “Check-Up”
The key to a successful check-up is management commitment. The time and effort put into a comprehensive evaluation is well spent if management invests in following through to implement efficient processes, train staff where needed, and eliminate roadblocks that hinder workflow.
Implementing standards will help to benchmark future performance in key areas:
- productivity standards for staff (number of accounts billed per biller, number of accounts worked by each collector, etc.);
- performance standards (gross days revenue outstanding; bad debt write-offs; days from discharge to final bill; etc.)
- eliminate processes that are unnecessary or outdated that slow down the workflow.
In addition to implementing standards and process improvements, the organization must commit to monitoring performance on an ongoing basis. In this way, the receivables management team can be assured that productivity is maintained, issues are escalated and handled effectively, and that new roadblocks don’t appear in the processes.
The combination of well-trained, knowledgeable staff following well-defined, “best practice” processes while armed with the right technological tools is a strategy for the successful operation of the receivables management team.
When successful, the receivables management department will:
- Optimize resources (increase productivity and quality)
- Reduce administrative and unnecessary activities and costs
- Streamline and strengthen processes
- Properly use technological tools to improve productivity and efficiency
- Improve cash flow and decrease accounts receivable collection time
- Respond effectively to external forces that impact the hospital
- Commit to training to maintain skills and to retain skilled staff
A Quiz: Receivables Management
1. Which of the following places demands on the receivables management department?
- greater need to collect demographic information and verify insurance
- increased focus on utilization management
- Increased collection agency cost
- All the above
2. True or False. The following are symptoms of an ailing receivables management department:
- Increased staffing cost due to rework and customer service
- Increased collection agency cost
- Increased compliance issues
3. “Roadblocks” that hinder the smooth, efficient progress of work through the system can be identified by performing:
- Performance Evaluation
- Process Analysis
- Workflow Mapping
4. A successful receivables management department needs to:
- properly use technological tools to improve productivity and efficiency
- improve cash flow and decrease accounts receivable collection time
- respond effectively to external forces that impact the hospital
- all the above
5. The combination of well-trained, knowledgeable staff following well defined “best practice” processes while armed with the right technological tools create a strategy for the successful operation of the receivables management team.
Answers to quiz: 1-D; 2-A; 3-C; 4-D; 5-A