In health care, accounts receivables represent due payments from patients for services offered and payments due from insurance companies (Ferenc 169). The accounts receivables constitute the largest part of hospitals current assets in a balance sheet (Ferenc 169). Hospitals employ resources that cost money in offering services to patients hence they require an adequate cash flow. Patient statements and claim forms are prepared for billing after patients have received medical services. Managing the accounts receivables in a hospital requires an effective system that captures all the events in the accounts receivables’ cycle (Ferenc 172).
The cycle begins with the admission of a patient to the time when payment is received. When patients pay, the payment is posted to their accounts. Adjustments are also posted to show uncollectible amounts and discounts (Ferenc 181). On the other hand, payments from third parties, insurance companies, are processed by the insurer’s determination. Patients’ statements and claim forms should be regularly updated for any transactions that might occur and monthly summaries provided for reconciliations (Ferenc 181).
The ability of a hospital to collect payments plays a key role in ensuring adequate cash flows for day to day operations. The performance in receivable collections is measured using the average days in accounts receivable and measuring the receivables “aging buckets” percentages (Hook 1). The average days in accounts is the period it takes to collect the payments due; add the last six months charges and divide the figure by the months a total number of days. Divide the total accounts receivable by the average daily charges to get the Days in Accounts Receivable (Hook 1). The other measure is the conversion of aging buckets to a percentage of the total accounts receivable. Buckets are grouped in months for example 0-30 days, 31-60 days, 61-90 days (Hook 1).
Employing front-end procedures facilitate the receivables’ recovery procedure; efforts should begin early in the revenue cycle. The procedure includes getting sufficient patient and insurance information early, communicating the hospital’s policy to the patient, requiring patients to make down payments before treatment (Ferenc 172).
Works Cited
Ferenc, Debra P. Understanding Hospital Billing and Coding. St. Louis, Mo: Elsevier, 2014. Print.
Hook, Jim. "Medical Accounts Receivable: Monitoring and Measuring Performance". The Fox Group, LLC. N.p., 2011. Web. 8 Apr. 2016.
