Want to know how a healthcare facility’s revenue cycle management is performing on collecting? Take a look at the calendar.
The number of days an account is unpaid is generally higher at the start of the year — 51 days in January, for example — than at the end of the year, although the amount of bad debt being written off spikes in June and December every year, typically when hospitals end their fiscal years, according to a report released recently by Crowe LLP.
“For health system finance professionals who long suspected that seasonality affected net revenue but didn’t know how much … you were correct, and the effect is material,” said Brian Sanderson, managing principal of Crowe healthcare services, in a statement.
The amount of bad debt written off at the end of 2018 was significantly higher than the amount written off at the end of 2017, according to the report. The amount of bad debt typically written off at the end of the year is 22% higher than average, according to the report.
The report cited three recommendations to help healthcare facilities manage the seasonality of their revenue and collections:
- Move to a rolling budget process to enable rapid management decision-making.
- Review the optimal use of diagnostic assets, as these frequently high-cost items often are underutilized and can be scaled.
- Build greater autonomous functions into the revenue cycle to handle ebbs and flows of exceptions (for example, denials) without the need to adjust the workforce.