Managing receivables in healthcare isn’t just about collecting payments. It’s about keeping your practice financially healthy while maintaining strong patient relationships. Effective account receivable management is crucial for optimizing your revenue cycle and ensuring a steady cash flow.
If you’re dealing with delayed payments, rising claim denials, or an AR backlog that keeps growing, you’re not alone. The average healthcare provider waits 30-60 days to collect payment, and nearly 20% of claims get denied on the first submission.
In this guide, you’ll discover eight actionable tips for receivables management that can help you accelerate cash flow, reduce denials, and strengthen your revenue cycle. Whether you’re a small practice or a multi-location facility, these strategies will help you manage receivables more effectively, get paid faster, and improve your overall financial health.
What is Accounts Receivable Management in Healthcare?
Accounts receivable management is the process of tracking, following up on, and collecting payments owed to your healthcare practice. This includes insurance reimbursements, patient payments, and outstanding balances. The accounts receivable process is a critical component of your overall financial management strategy.
Effective AR management ensures that:
- Claims are submitted accurately and on time
- Denied claims are appealed quickly
- Patient balances are collected efficiently
- Your practice maintains positive cash flow and working capital
Poor receivables management leads to revenue leakage, increased administrative burden, and potential financial instability for your practice. Implementing a robust accounts receivable system can significantly improve your financial reporting and overall fiscal health.
Why Accounts Receivable Management Matters
Healthcare practices face unique challenges when it comes to collections. Unlike other industries, you’re dealing with multiple payers (insurance companies, government programs, and patients), complex billing procedures, and constantly changing regulations.
According to the Medical Group Management Association (MGMA), practices with AR days above 50 are at higher risk of cash flow problems. The longer a claim sits unpaid, the less likely you are to collect the full amount. This metric, known as days sales outstanding (DSO), is a key indicator of your receivables management efficiency.
Strong account receivable management directly impacts your bottom line by:
- Reducing the time between service delivery and payment
- Minimizing write-offs and bad debt
- Improving staff productivity
- Providing better financial predictability
- Enhancing overall cash flow management
8 Effective Tips for Accounts Receivable Management Success
1. Verify Insurance Eligibility Before Every Appointment
The foundation of successful receivables management starts before the patient even walks through your door. Insurance verification prevents claim denials due to eligibility issues, which account for nearly 27% of all denials according to the American Medical Association.
What to verify:
- Active coverage status
- Specific benefits for the planned service
- Co-pay, deductible, and coinsurance amounts
- Pre-authorization requirements
- Network status
Make this a standard protocol for every appointment, not just new patients. Insurance coverage can change monthly, and patients don’t always inform your office of updates.
Real-time eligibility verification tools can automate this process and reduce manual errors. When your front desk staff has accurate information upfront, they can collect patient responsibility at the time of service. This will significantly improve your collection rates and reduce potential payment delays.
-
Implement Clean Claim Submission Processes
Clean claims get paid faster because they have no errors or missing information. The industry benchmark is a 95% clean claim rate, but many practices fall short. Improving your clean claim rate is essential for effective receivables management.
Common reasons claims get rejected or denied include:
- Incorrect patient demographic information
- Missing or invalid diagnosis codes
- Mismatched procedure codes
- Lack of medical necessity documentation
- Untimely filing
Best practices for clean claim submission:
- Use claim scrubbing software to catch errors before submission
- Train your billing staff on current coding guidelines (ICD-10, CPT)
- Establish internal quality checks
- Submit claims within 24-48 hours of service
- Maintain detailed documentation to support medical necessity
ProMantra helps healthcare providers achieve clean claim rates above 98.5% through comprehensive claim scrubbing and expert coding review, reducing rejections and accelerating reimbursements.
3. Monitor Key AR Metrics Regularly
You can’t improve what you don’t measure. Tracking accounts receivable management metrics gives you visibility into your revenue cycle performance and helps identify bottlenecks. Regular financial reporting is crucial for managing receivables effectively.
Essential AR metrics to monitor:
- Days in AR: Industry best practice is 30-40 days
- AR aging buckets: Percentage of AR in 0-30, 31-60, 61-90, and 90+ day categories
- Collection rate: Total collections divided by total charges
- Denial rate: Percentage of claims denied on first submission
- Net collection rate: Collections divided by allowed amounts (adjusting for contractual write-offs)
- Average days delinquent: Measures the average number of days invoices are past due
Review these metrics monthly or even weekly if you’re experiencing cash flow issues. Look for trends rather than one-time fluctuations, and investigate any sudden changes.
Consider creating a dashboard that your entire revenue cycle team can access. Transparency around performance metrics motivates teams and ensures everyone understands priorities. This approach can significantly improve your overall collection efficiency.
4. Establish a Systematic Follow-Up Process
Many practices lose revenue simply because they don’t follow up persistently on unpaid claims and patient balances. An effective accounts receivable system includes structured follow-up protocols based on claim age and payer type.
Sample follow-up timeline:
- Day 15: First electronic inquiry if claim status is unknown
- Day 30: Phone call to payer for status update
- Day 45: Appeal if denied; second patient statement if patient responsibility
- Day 60: Escalate to supervisor; consider external collection resources
- Day 90+: Management review; decision on collection agency referral
Assign specific staff members to follow up on claims in each aging bucket. Clear ownership prevents claims from slipping through the cracks and improves overall collection effectiveness.
For patient balances, use multiple contact methods—statements, phone calls, text messages, and email reminders. Research shows that patients respond better to digital communication options. Consider implementing automated reminders to improve efficiency and consistency in your follow-up process.
5. Address Denied Claims Immediately
Ignoring denied claims is like leaving money on the table. Yet many practices lack a structured denial management process. Effective denial management is a crucial part of receivables management.
The Healthcare Financial Management Association (HFMA) reports that 65% of denied claims are never reworked, and practices write off billions in recoverable revenue each year.
Effective denial management includes:
- Daily review of denial reports
- Root cause analysis to identify patterns
- Quick appeals with supporting documentation
- Process improvements to prevent recurring denials
- Tracking denial overturn rates
Create denial categories to identify trends. Are you seeing multiple denials for medical necessity? Lack of prior authorization? Coding errors? Each category requires different corrective actions.
Partner with your clinical team when denials involve documentation issues. They need to understand how incomplete notes directly impact revenue and the overall accounts receivable process.
ProMantra’s denial management services include dedicated specialists who analyze denial trends, file appeals with proper documentation, and implement preventive measures—recovering revenue that would otherwise be lost.
6. Offer Flexible Payment Options to Patients
Patient responsibility continues to grow as high-deductible health plans become more common. Many practices now collect 30% or more of their revenue directly from patients. Offering diverse payment methods can significantly improve your collection rates and patient satisfaction simultaneously.
Payment options to consider:
- Online payment portals accessible 24/7
- Credit card and HSA/FSA card acceptance
- Payment plans for balances over a certain threshold
- Text-to-pay options
- Mobile payment apps
Discuss payment expectations before services are rendered. Transparency about costs and available payment terms reduces surprise bills and increases the likelihood of collection. Implementing a user-friendly payment portal can streamline the process for both patients and your staff.
For larger balances, offer interest-free payment plans. Patients are much more likely to pay $100 monthly for 12 months than receive a $1,200 bill all at once. This approach can help reduce overdue invoices and improve cash receipts.
Train your front desk staff on how to have payment conversations with empathy and professionalism. The goal is to collect payment while maintaining positive patient relationships and enhancing the overall customer payment experience.
7. Leverage Technology and Automation
Manual accounts receivable management is time-consuming, error-prone, and inefficient. Technology solutions can dramatically improve accuracy and productivity. Investing in AR software and accounts receivable automation can transform your revenue cycle management.
Automation opportunities:
- Automated eligibility verification: Real-time checks before appointments
- Electronic claim submission: Faster processing than paper claims
- Automated payment posting: Reduces manual data entry and errors
- Patient payment reminders: Scheduled texts and emails
- Reporting dashboards: Real-time visibility into AR performance
- Electronic invoicing: Streamlines billing and reduces paper waste
Many practice management systems include AR management tools, but they’re often underutilized. Invest time in training your staff to use these features effectively. Implementing a comprehensive accounts receivable system can significantly improve your collection process and overall financial health.
Robotic process automation (RPA) can handle repetitive tasks like checking claim status and posting payments, freeing your staff to focus on complex issues that require human judgment. This technology can be particularly effective in managing cash application and payment tracking.
Consider the return on investment when evaluating technology. If a solution saves 10 hours of staff time weekly, that’s meaningful labor savings plus improved cash flow from faster collections.
8. Partner with Revenue Cycle Management Experts
Sometimes the most effective accounts receivable management strategy is recognizing when you need external expertise. Outsourcing AR management to specialists allows your clinical staff to focus on patient care while experts handle the complex, time-consuming revenue cycle work.
Benefits of RCM partnership:
- Access to specialized expertise and best practices
- Reduced administrative burden on your staff
- Improved collection rates and reduced AR days
- Scalability during growth or staffing challenges
- Technology access without capital investment
- Enhanced credit management and assessment capabilities
When evaluating RCM partners, look for transparency around metrics, experience in your specialty, and a proven track record of improving AR performance. A good partner should offer comprehensive receivable management services tailored to your specific needs.
ProMantra provides comprehensive revenue cycle management services tailored to healthcare providers of all sizes. Our team combines advanced technology with hands-on expertise to optimize your entire revenue cycle from patient scheduling through final payment collection. We focus on reducing your AR days, improving collection rates, and giving you clear visibility into your financial performance.
Common Accounts Receivable Management Mistakes to Avoid
Even with good intentions, practices make preventable mistakes that hurt their AR performance:
Waiting too long to follow up: The older a balance gets, the harder it is to collect. Follow up early and often to minimize payment delays.
Lack of staff training: Revenue cycle regulations and payer requirements constantly change. Invest in ongoing education for your billing team to ensure they’re up-to-date on the latest billing procedures and credit policies.
Ignoring small balances: Small patient balances add up. Don’t write them off automatically, many patients will pay if asked. Implement efficient processes for handling these smaller amounts.
Poor documentation: Incomplete clinical documentation leads to denials and delays. Make documentation quality a clinical priority to support your accounts receivable process.
No process standardization: When each staff member follows their own approach, results vary widely. Create and enforce standard operating procedures for consistency in your receivables management.
Neglecting customer credit assessment: Failing to evaluate patient ability to pay can lead to increased bad debt. Implement a fair and consistent credit assessment process to mitigate financial risks.
The Bottom Line: Consistent Execution Drives Results
Accounts receivable management isn’t about implementing one magic solution. it’s about consistently executing fundamental processes well. Effective receivables management requires a comprehensive approach that addresses every stage of the invoice to cash cycle.
The practices with the strongest AR performance share common characteristics: they verify eligibility upfront, submit clean claims quickly, monitor metrics regularly, follow up persistently, and continuously improve their processes. They also leverage technology to automate routine tasks and focus on strategic initiatives that improve collection efficiency.
Start by assessing your current AR performance against industry benchmarks. Identify your biggest gaps, then implement improvements systematically rather than trying to fix everything at once. Pay particular attention to your collection effectiveness index and average days delinquent to gauge the overall health of your receivables.
Remember that accounts receivable management directly impacts your practice’s financial health and your ability to serve patients. Making it a priority pays dividends in improved cash flow, reduced stress, and long-term sustainability. By implementing robust credit policies, streamlining your billing procedures, and focusing on customer communications, you can significantly enhance your overall receivables management process.
Take Control of Your Revenue Cycle Today
Are delayed payments and rising AR days affecting your practice’s financial performance? You don’t have to manage receivables alone. Implementing effective accounts receivable management strategies can transform your practice’s financial health.
ProMantra specializes in helping healthcare providers optimize their revenue cycle management. Our team of experts handles everything from insurance verification and claim submission to denial management and patient collections—so you can focus on what matters most: delivering excellent patient care.
Our comprehensive receivable management services include:
- Advanced AR software implementation
- Customized collection policies and procedures
- Automated payment reminder systems
- Detailed financial reporting and analytics
- Expert handling of payment disputes and credit assessments
- Strategies for bad debt reduction and improved cash flow management
Ready to improve your accounts receivable management?
Contact ProMantra today for a free consultation and discover how we can reduce your AR days, increase collections, and strengthen your practice’s financial foundation. Let us help you transform your accounts receivable process into a streamlined, efficient system that maximizes your revenue potential and improves your overall financial health.
