Eight Considerations for Improving Cash Flow for Healthcare Services
Steps to Take Now Heading Into 2022 (Article 1 of 4)
This series is targeted to privately-held healthcare services companies, that we often find have limited resources to compete with larger scale healthcare organizations. In our first article, we highlight eight questions that, when answered and addressed quickly, can improve cash flow. The past 18 months of uncertainty has highlighted the importance for cash flow to deliver quality patient care. Whether it’s staffing shortages driving higher labor costs, increased supply costs, reimbursement delays from insurance, or applying for forgiveness on governmental funds – practices need better information.
Here are some areas to consider:
1. How can your team improve patient responsibility collections?
2. Are you monitoring how proposed reimbursement guidelines could impact your staffing?
3. Do you have visibility into reimbursement by encounter?
4. Are you actively monitoring trends in reimbursement by insurance payor?
5. How do you track and mitigate payor denials and recoupments?
6. How can you improve the collection speed of Accounts Receivable?
7. What are the costs and time associated with launching a new provider?
8. How do you reduce inefficiencies caused from employee turnover?
This list is just a sample of ways our team guides healthcare services companies to better cash flow. While many of these issues are intuitive to healthcare operators, implementing strategies around these issues can be difficult. In a short example, we look at how, once equipped with the right information, an Owner guided the management team to make some operational changes. Although volume and total cash receipts were up year-over-year, costs increased as well. After studying reimbursement trends, the management team realized the practice had declining collections and increasing labor burden per encounter. The team focused on improving the patient experience, and as a result, operational changes resulted in increased profitability. By being more proactive with the pre-arrival and check-in activities, the practice experienced: (i) improved patient collections, (ii) less denials, (iii) increased total collections per encounter, (iv) decreased time to collect Accounts Receivable, and (v) consistent processes at the front desk resulting in less turnover.
If any of these items sound like opportunities for your company to improve, and you want to learn more, please reach out to us.
Coming up next in our series is Understanding Multi-Location Profitability. We’ll illustrate the importance of looking at profitability by location and/or service line, and the operational efficiencies gained when armed with the right information.
Founded in 2001, FocusCFO is the leading onsite fractional CFO services provider in the Midwest and Southeast. FocusCFO works closely with small to medium sized businesses helping business owners gain control over three key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses. For more information, follow us on LinkedIn.