What are typically some of the greatest challenges we have managing the revenue cycle, and it's allocation of resources?
Typically, what will a physician tell a person in the centralized business office?
Historically it's been a strategy when managing the revenue cycle with limited resources to focus on the larger balances. The problem with this is over a period of time (12-18 months) when you look at a report that shows multiple small balances of a hundred dollars or less unpaid, it can add up to a very large sum. All of a sudden you're looking at $75,000 to 125,000 of unpaid small balances. That is a lot of money to an individual physician. They've already paid their overhead, so had those dollars been collected they would have fallen right to the bottom line.
What we encourage you to do is dedicate resources whose sole purpose is to manage and work the hundred dollar or less balances. We have found by focusing the appropriate number of resources to work the small balances, it has resulted in a significant reduction in outstanding balances. Our clients have greatly appreciated these efforts and the rewards associated.
If you're sitting with five or ten claims ranging from thousands of dollars to $50, human nature is to go after the thousand dollar claims. By virtue of assigning somebody a hundred dollars or under claim, they're essentially ringing the bell every time they get a $90 claim paid. This is exactly the whole point of this exercise, making sure that they're focusing on those small dollars so that you're not just letting those sit. If you let the small claims sit and then one day decide to send them off to be claimed, you're now twelve months or eighteen months into it. The chances of collecting those even through a collection agency are tough because that patient might be long gone by then. Having someone look at the under hundred-dollar claims only is vital and a very important part of managing the revenue cycle.
Another common problem related to just working the accounts receivable is when an office, for reasons related to staffing, technology, etc. falls behind with the management of their revenue. The knee jerk reaction for most of our doctors is to take the limited resources and say, "Start working these old accounts." Well, we all know the oldest accounts are the most difficult accounts to work. If the focus is only on the old, you don't stay current with the new charges, and before you know it the new is converting into old and we see that these offices are constantly always behind the eight ball. Again, the focus in managing your revenue cycle should be paying attention to the current. Stay current, and then slowly start to work the old.