Is your accounts receivable balance (AR) low or high? What should it be?

A Healthy Accounts Receivable Balance Could be Low or High

Hey, feeling good because your accounts receivable balance (AR) is low?  Got your Billing team/service trained to pounce on claims over 30 days old and get them taken care of, keep your AR Clean as a Whistle?

Well, hold on there, Cap’n, that’s not necessarily a good thing: as a matter of fact, AR that’s too clean is exactly the same as a sail that’s too tight on a sailboat.  “What’s that”, you ask?  “A sail that’s too tight?”

Well, gentle reader, a sail that’s too tight sure looks good but it can’t draw, you know what I mean?  It won’t pull the boat along because the wind’s got nothing to push against: the sail’s gotta have a belly in it, like a guy sittin’ at a table, ready to consume some serious grub: gotta have a belly to really do some damage, make a serious dent in the mashed potatoes.

A tight good-looking sail means it won’t help pull the boat along; an overly clean looking AR sheet means you’re leaving money on the table. Your AR needs a belly because a belly is evidence your Billing staff is working to collect money on claims that aren’t getting paid but should, just like that taut tight sail should be providing horsepower but ain’t: needs a belly!  Man, I wish that were true for guys like me… wish I could say I needed a belly since dieting is the worst.

Examples of Low AR Issues

But back to the subject at hand with a fer instance: an Insurance Company denies a claim because the rendering provider doesn’t write “microscopic examination reveals” when reporting cell counts.  The insurance auditor, following the rules like a good kid, denies the claim. “Wait a minute”, your Billing department should exclaim, “how can cell counts be reported without use of a microscope?  We’re going to fight that denial!”  The claim sits there for 4 months and gives the AR a temporary belly, but after a review the claim gets paid.  Hey, that helps pull the boat along: I prefer a fat-looking AR when those are the results!

Got another fer instance for you: “patient gives verbal consent to procedure” is written in a SOAP note and the auditor denies the claim, saying consents must be written, not verbal.  “What’s in the contract” asks your Billing team.  “Are verbal consents kosher?  Yes?  Well then, let’s fight that denial and get it paid!”  Might make your AR look fat and ugly, but now your Billing department is bringing in thousands of extra dollars a month, and your clinic is recording record revenue marks.

Got return patients who haven’t paid their deductibles?  Checking in, waltzing past the front desk to see the doctor, all smiles, turns out they owe $800 or more for the last 2 years?  Hey, don’t write that off: get your Billing department to hound the front desk to collect deductibles – pull the boat along!  There’s good fat and bad fat, but so far this is all good AR fat.

A lot of docs concentrate on having clean looking AR, spend time hyper-focusing on a claim that’s been out there for 120 days, making specious assumptions about all outstanding claims based on that one claim.  Bad approach.  Got a lot of claims 120 days out?  More?  Good!  Maybe even Great!  One claim is not representative of all claims!  Take a look at the notes on that claim – it could be your Billing department is appealing that claim, making sure your financial sails have a belly, pulling the boat along.


So don’t put pressure on Billing departments to keep your AR artificially clean: work with your Billing department to fight denials, be patient, make sure they let you know what additional supporting documentation they need.  Why did a claim get denied?  What adjustments does your clinic staff, or you yourself, need to make to reduce denials?  If your AR is low because you’ve used your claims findings to drive clean workflow, from demographic entry to encounter documentation to patient AR collection then my hat’s off to you, well done: if you drive your Billing department to have a clean AR report every month, regardless of the circumstances, then you’re encouraging write-offs at the drop of a hat backed up by an EOB marked “denied”, even-though, with a little due diligence and patience, it should’ve been paid.

Like sailing, Billing is a balancing act: let out that sail, give it a belly, watch your speed over ground and if it goes up give yourself a pat on the back and, real salty like, say “sail needed a belly to draw better”.  Take a look at your AR, consider previous charges and a KPI such as Average Payment per Visit to help you decide if your AR belly is too big or too small, watch your monthly revenue increase significantly and give yourself a pat on the back, say “our AR was too clean, just needed to be patient and work it”.

You sail a lot better with a belly.


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Brad Sclar has founded several successful Healthcare IT companies within the last 20 years in the Denver area — PRS Network, Phasis Group, and MD-IT. In addition to multiple IT certifications he supports voice recognition software into multiple EMR environments nationwide, serves as the CIO of the PRS IT Division, overseeing template development, maintenance of client LAN installations, custom software development, HL7 interfaces between EMRs, and the installation of the Health Record portion of the EMR software packages that PRS represents. Currently, he is involved in launching a Urology focused MSO.