What is AR?
AR is the short form of accounts receivable. It is all of your clinic’s outstanding invoices or money owed by clients. It specifically relates to money a business (in your case a clinic) is owed because it delivered a product or service. Think of it as a short-term line of credit or the time you extend to clients to pay their invoices.
AR is usually recorded as an asset in financial statements because there is a legal obligation placed on customers to repay their debt. But, AR can become a liability when it starts to age. Aging is the term used to refer to the length of time an invoice has been outstanding. The longer an invoice goes unpaid, the more it’s aged, the more risk you take on as a business. Aged AR is typically measured in 30-day increments.
Aged AR and Financial Health
Aged AR is a good indicator of your clinic’s health. It can also indicate the financial health of your customers, how able they are to pay and pay on time. Most importantly, the amount of aged AR and how much it’s aged can be a warning sign that your clinic is slowing down or that you are taking on a larger financial risk with your current customer base. As you take on more AR and it ages you are taking on greater risk as a business. Consider that if you don’t collect an invoice at the time of appointment you may never collect it. That adds up!
Step 1: Reduce Days in AR
There are many ways to reduce AR, but the easiest way is to have patients pay at the time of their
appointment. We suggest getting their invoice ready while they’re in treatment. Be sure to charge their insurance company first, so you know exactly what their co-pay will be. If you use InnoCare Software, it will automatically calculate this total!
Step 2: Reduce Rejected Claims
Often, a clinic’s AR is due to rejected, incomplete, or improperly submitted insurance claims. Reducing your denied claims will improve your billing accuracy and make sure you’re charging patients the correct amount. When filing claims, be sure that all mandatory fields are complete, and check your online portals regularly to see if your claim is rejected, partially rejected, or accepted.
Step 3: Increase Patient Visit Average
Patient visit average (PVA) is the number of visits patients make to your clinic before falling off or being discharged. It’s a good measure of how efficiently you’re using your staffing resources and how happy your patients are with their care. Increasing that average, while also providing high-quality care goes a long way to improving your clinic’s financial health.
Increase your PVA by engaging with patients and building trust. Make sure your whole team is friendly, engaging, and informative. Ensure your clinicians explain treatment plans fully and provide patients with the information they need to feel comfortable with their treatment.
We suggest booking patients in for their entire treatment plan all at once. InnoCare Software will book recurring appointments, send patients reminders, and track their insurance coverage for you. It’s the easiest way to keep patients coming back!