All practices have accounts receivables. There is a wide distribution of how efficiently Pediatric practices manage the revenue cycle to minimize the amount of revenue in accounts receivable. A common measure in the industry for benchmarking how well a practice manages the revenue cycle is Accounts Receivable Days or more commonly known as AR Days. What are AR days? Let’s look at an example. If a practice has an average of $100,000 in gross charges a month and currently has $200,000 in accounts receivable (waiting to be paid by insurance companies and patients), the practice has approximately 60 AR Days. All practices should continue to optimize their processes and systems until the practice consistently operates at less than 30 AR days.
There are many inefficiencies that slow down the revenue cycle for practices. For instance, some practices leave a copy of all their charges each week for a biller to ‘pick up’ then send to the insurance company. The biller/billing company then needs to enter these charges in their system, review and send to the clearing house. In some cases, at least two weeks pass prior to the claim being uploaded to the insurance company. I am aware of some hospital systems that wait to the end of the month to send all claims – what a wasteful practice! A strong Pediatric Billing company measures, monitors and benchmarks these processes and looks for ways to improve the AR days for the practice. This usually requires best practice sharing and routine evaluation of pain points in the revenue cycle. This is difficult for an average biller of a practice to do successfully due to their time and focus need to focus on the daily management of claims. Pediatric practices are dependent on the practices systems, processes and back-end billing team to minimize the AR days for the practice.
