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By John Talbot, Ph.D.

Saturday, November 21, 2009

Is your organization being paid for all services delivered? Do you have revenue leaks? Revenue leakage in the health care industry is estimated to be between 5% and 10%; as margins become more compressed, it’s essential to minimize leakage.

You first must identify both your “direct” and “opportunity” revenue leaks. Direct leaks are those situations where you’re not collecting the full amount for services delivered and billed. Opportunity leaks are those flaws in your structure and processes that prevent you from billing for services delivered. To correct the problem, focus on the ABCs of accounts receivables management—admissions, billing, and collections.

Admissions.  Getting the “front end” right is critical. To improve the admissions process, centralize accountability for the accuracy of client demographic information (i.e. benefits coordination/verification, authorization, required clinician credentials). Establish required data fields for consumer registration and perform QA on data entry for 100% of client registrations. Then, set up reports for common admissions-related billing problems (i.e. missing data fields, missing service authorizations, missing diagnoses).

Billing.  Here the goal is to streamline and improve billing processes for maximum efficiency. Since billing starts with service entry, enter all services into your Management Information System (MIS) within 24 hours, then develop a report to track “late service entry” to identify clinicians and locations with services entered more than seven days from the service date. Bill payers on a weekly basis to improve cashflow, and use electronic billing whenever possible.

Collections.  Accounts receivable (A/R) follow-up and collection is the biggest problem for most organizations. A/R staff should be able to account for the status of all claims that have aged 60 days. Use electronic payment and remittance posting to save time and money, and use your MIS to post A/R follow-up notes on consumer accounts and claims. Write bad debts off A/R as soon as the claim is identified as uncollectable.

Review your current operations and identify the sources of revenue leakages. Then, it is up to your management team to fix the leaks before they cause a real flood. After all, minor operational improvements can make a major difference to your organization’s bottom line.



John F. Talbot, Ph.D.
Executive Vice President, OPEN MINDS


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Access “Maintaining (& Increasing) Your Organization’s Profitability: A Structured Approach to Diagnosing Your Organization’s Revenue & Margin Challenges,” a webinar given by myself and my colleague Steve Howe. PREMIUM

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