How to improve the health of your accounts receivable
It’s a tough time for medical practices and hospitals. Seventy-two percent of healthcare practices reported a drop in revenue due to the pandemic. And InstaMed reports that hospitals have had to suspend elective surgeries to the tune of $20+ billion in losses.
It’s no wonder healthcare providers are laser focused on finances.
Managing receivables is the number one liquidity initiative for providers.
Thirty-seven percent of adults have had trouble paying for basic living expenses — including health insurance costs — during the pandemic.1 Half of consumers would likely need a payment plan to cover a $400 medical bill.2 In fact, medical bills are the largest source of collections debt, with agencies holding $140 billion in unpaid medical bills last year.3
Providers share in the pain of consumers’ healthcare crises as they are often forced to wait for payment. After a patient visit, 63% of providers must wait more than 30 days to collect payment. Seventy-eight percent of those providers are owed more than $1,000 versus 49% who are owed more than $400.
“Financial viability and planning” and managing receivables were top concerns of respondents to a Deloitte survey of healthcare finance executives.
Improving the patient experience could increase revenue.
There’s disagreement between what providers and consumers think about collection efforts. Forty-two percent of providers think collection efforts have no impact on the patient experience, while 56% of consumers would consider switching providers for a better payments experience.4
Opinions also differ on how payments are collected. Sixty-six percent of consumers receive medical bills through the mail, but only 14% want to mail a paper check. More than half of consumers are interested in mobile payments for medical bills. Eighty-six percent of consumers like to pay recurring bills online, while 58% of providers rely on mailed paper statements to collect.
This is a huge opportunity for providers. Accenture estimates that improving the patient experience could increase revenue by five percent to 10% (pre-COVID levels) within 12 months.
Digitization plays a major role in bridging the gap — not only to accelerate payments, but also to keep patients happy.
Automated AR solutions maximize cash flow.
The ongoing pandemic is heightening the sense of urgency for medical providers to increase available cash. Keeping accounts receivable (AR) to 30-40 days improves a practice’s financial health. A leading healthcare alliance estimates that implementing better practices across the entire revenue cycle could have saved providers $16.3 billion last year.
Integrated, automated AR solutions accelerate and optimize the entire receivables process, delivering faster collections and fewer follow-up delays. Businesses with even a moderate degree of automation achieve days sales outstanding (DSO) of 40 days, which is 23% lower than those still using manual systems. Companies with automation also see an average reduction of 25% in follow-up (on late payments) delays.
An automated AR suite also provides straight-through processing (STP) across all payment channels, aggregating electronic and check payments regardless of location, type, or channel. This reduces unnecessary deductions, cuts labor costs, and better manages payment relationships. Artificial intelligence capabilities increase STP and quicken the application of cash to the balance sheet.
Integrating all payment data into a central repository with a dashboard gives providers visibility into the entire AR lifecycle.
Operating during a pandemic is stressful enough. Don’t wait to implement an AR solution that expedites revenue recovery. Contact Synovus Treasury and Payment Solutions, your Treasury Consultant or Relationship Manager to learn how we can help you better manage your organization’s cash flow and liquidity.
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