An Easy Way to Calculate How Much Your A/R Is Costing You Yearly

Healthcare providers across the country are losing out on a significant amount of revenue yearly. A single provider with a small practice can lose out on $60K or more in a single year. Here, I will provide you with a simple way to calculate just how much revenue your practice may be losing out on.

With today's online submittal process, a clean claim is generally paid within 14-days. However, because some of your patient’s will have 2 or maybe 3 coverage’s you will not receive payment from one or all carriers within that 14 day time frame. So to make this process more practical, we can calculate for All Insurance balances over 30-days. It doesn't matter if you Bill In-house, or your Billing is outsourced, you can still do this calculation but you may have to have your billing service provide the numbers below.

First, you will need to run 3 reports on your Practice Management Software for (All) Insurance Balances. Run the 1st Report for (31-60days), then the 2nd for (61-90days), and the 3rd for (91-120days), then add all 3 balances, and divide by 3. This will give you your monthly average. Now multiply your monthly average times 12. Now you can see just how much revenue you’re operating without, not to mention Insurance Companies are making interest off that amount. Even if your A/R monthly average were a mere $5K, you’re losing out on $60K per year in revenue and we haven’t even calculated the amounts over 120 days, if applicable.

Now I’m sure you’re probably thinking “I have people working the A/R” as I am more than sure that is the case. However, just as fast as your people can resolve a claim, a new claim will take its place which is why your A/R never seems to be on the decline.

I’ve been informing providers for a long time that they do not have to live with so much revenue tied-up in their A/R. In reality, rarely should your A/R go over 30-days. Even if you paper-billed 3 carriers, it is totally realistic to receive final payment within 30-days. In 16 years I’ve never had an A/R I was assigned to go beyond 30 days.

Be proactive about your A/R and you’ll start to see that money coming back into your practice where it belongs. Best of luck to all of you.
MedicalArGuru