Aging AR: How to manage the healthcare billing crisis

Financial management is a critical concern for medical practices and clinical laboratories. One of the most pressing issues is the management of aging accounts receivable (AR), particularly those with balances older than 90 days.

This challenge impacts cash flow and strains administrative resources, and the stress on an organization can affect the quality of patient care. When organizations waste time and focus trying to overcome the aging AR problem, they are unable to adequately resource a full patient schedule.

Aging AR refers to the outstanding balances and reimbursements owed to healthcare providers and laboratories that remain unpaid beyond the expected timeframe, typically categorized as 30, 60, or 90 days overdue. When AR extends beyond 90 days, it becomes increasingly difficult to collect, posing a significant threat to a practice's financial health.

Several factors contribute to this issue:

• Complex billing processes: Navigating insurance claims is complicated and leads to delays and errors that contribute to aging AR
• Understanding the issue: Many practices may not have the expertise to realize the scale and true cost of an aging AR problem, particularly if their numbers seem to look the same over time and they accept bad numbers as the norm because they have not done a best-practices comparison
• Resource limitations: Many practices and laboratories lack the dedicated resources or expertise to focus on collections, allowing overdue accounts to accumulate
• Regulatory challenges: Constant changes in healthcare regulations can create confusion and inefficiencies in billing practices
• Patient payment delays: Economic factors, incorrect calculation of balances due, and high out-of-pocket costs can lead to patients delaying payments

These factors combine to create a growing pile of unpaid claims and balances, which causes practices and labs to divert attention from patient care to administrative headaches.

Addressing the issue of aging AR requires a strategic approach, and that's where ARIA RCM Services by CompuGroup Medical steps in. Our experts specialize in revenue cycle management, and—with our 90+ Aged AR Program—offer a lifeline to practices and laboratories struggling with overdue accounts.

How ARIA RCM Services can help

• Focused expertise: ARIA stands on a wealth of experience in managing healthcare receivables. Our team understands the intricacies of billing and collections, providing tailored solutions to streamline processes
• Performance-based payment: A unique aspect of ARIA's service is its contingency-based model. ARIA only gets paid if the practice or laboratory collects, aligning our incentives with those of our clients and ensuring a vested interest in reducing aging AR
• Comprehensive analysis and strategy: Knowing the scale of a problem and more specifically, how to tackle it is a key first step. ARIA conducts a thorough analysis of a client’s AR, identifying bottlenecks and implementing strategies that not only work to collect to the aged balances, but also to improve the overall collections process. This helps clients avoid the same problems in the future
• Technology integration: Utilizing advanced technology, ARIA enhances efficiency, automating routine tasks and allowing staff to focus on higher-value activities
• Regulatory compliance: ARIA monitors and implements regulatory changes, ensuring that practices remain compliant and avoid costly mistakes

While the financial implications of aging AR are often the primary focus, it's crucial to understand how this issue extends beyond the balance sheet, affecting both patient care and the potential for business growth

If left unchecked, a practice or laboratory’s aging AR will impact its growth and the quality of its patient care.

Impact on patient care

• Limited resources: When a significant portion of a practice’s revenue is tied up in aging AR, there are fewer funds available to invest in patient care. This can mean outdated equipment, fewer staff members, and limited capacity to offer new services or expand existing ones
• Administrative burden: The task of managing overdue accounts can place a significant burden on administrative staff, diverting their attention from patient-focused activities. When practice principals are also care providers, they may also reduce their schedule to focus on administrative tasks, directly impacting the practice’s income potential. This can lead to longer wait times for appointments, slower responses to patient inquiries, and overall decreased patient satisfaction
• Stress and morale: Financial strain can lead to stress among healthcare providers and administrative staff. When a practice is constantly fighting to collect overdue payments, it can create a tense work environment, which can indirectly affect the quality of care provided to patients

Impact on practice growth

• Decreased revenue: Besides the obvious effects of delayed payments, many administrators will eventually write off aging AR as a loss. That means the business isn’t getting paid for the services it provides or collecting all the payments and reimbursements that it’s earned
• Inhibited expansion: Practices looking to grow and expand their services need a steady cash flow to invest in new technologies, hire additional staff, and open new locations. Aging AR can significantly hinder these growth plans by tying up the necessary capital
• Creditworthiness: Consistently high levels of aging AR can negatively impact a practice or laboratory's creditworthiness, making it more difficult to obtain loans or favorable terms from suppliers. This can further restrict an organization’s ability to invest in growth opportunities
• Reputation: A practice known for financial instability may struggle to attract top talent and new patients. Existing patients may be unhappy with the timing and accuracy of bills received. Word of mouth and online reviews can significantly influence a practice’s reputation, and financial health is a key component of that perception

Mitigating the impact with ARIA RCM Services

By leveraging the expertise of ARIA RCM Services, labs and practices can not only improve their financial health but also enhance patient care and position themselves for growth. ARIA's focused approach to managing aging AR ensures that clients can free up resources, reduce administrative burdens, and foster a healthier work environment.

With ARIA's performance-based payment model, clients can confidently invest in our services, knowing that the cost of ARIA's assistance is directly tied to successful collections. This alignment of incentives ensures that everyone is working toward the common goal of financial stability and growth.

For healthcare practices and laboratories, managing aging AR is not just about financial survival; it's about maintaining the ability to provide high-quality patient care. By partnering with ARIA RCM Services, organizations can reclaim lost revenue, reduce administrative burdens, and focus on what truly matters—patient outcomes.

As the healthcare industry continues to face financial challenges, ARIA offers a beacon of hope, providing the expertise and dedication necessary to navigate the complexities of revenue cycle management. By addressing the aging AR issue head-on, practices and laboratories can ensure their financial stability and continue delivering exceptional care.

Addressing aging AR is more than a financial necessity; it’s a strategic imperative for the overall health and growth of a healthcare practice. Partner with ARIA RCM Services to recover lost revenue and reinvest in patient care and future expansion. Ensure a thriving practice for years to come.