Accounts Payable Management
Credit ratings, cash flows, and supplier relationships are essential for running a successful healthcare business. Healthcare providers cannot afford to miss any payment windows, as timely bill payments play a critical role in maintaining these factors.
Why is Accounts Payable Management Significant?
The mission of the healthcare industry is to provide the best possible care to patients. Efficient accounts payable management can help healthcare providers achieve this goal in several ways:
- Late payments can disrupt the flow of essential goods and services needed for patient care. On-time payments ensure an uninterrupted supply chain from vendors, facilitating smooth business operations.
- Missed or late payments can damage cash flow, incur late fees, and strain relationships with suppliers. By ensuring timely bill payments, JetRCM helps maintain good credit and strong long-term supplier relationships.
- An efficient accounts payable process keeps you informed about early payment discounts and helps you avoid overdue charges, penalties, and late fees.
- A stringent accounts payable system allows you to easily track all invoices, preventing missed payments or duplicate payments.
- Following a streamlined accounts payable process significantly reduces the risk of fraud and theft.
Provider Productivity is high in terms of the number of patient encounters per full-time equivalent (FTE) provider. Average encounters are about
769
per month.
JetRCM believes it can help increase net collections by at least
20%
and reduce billing-related costs for the practice to less than 6% of net cash collections.
Reimbursement in terms of cash collected per claim (on average) is about
$134.
This is good but has ample room for improvement with a target of around $164 (22.4% improvement).
The labor cost of Revenue Cycle Management was not measured as data on staff-related costs or external billing service fees was not available. For this type of practice, the all-inclusive labor cost of revenue collection should be no more than
$10
per claim.
Accounts receivable management indicates ample opportunity for improvement as it appears that rejections and denials are not being worked consistently and aggressively. This is leaving approximately
$350,000
in possible reimbursements at risk of loss (the longer the A/R ages, the lower the probability of collecting 100% of its allowed value). This also increases the cost of capital due to a cash conversion cycle, which entails the utilization of resources that could be utilized elsewhere. Without reviewing the write-off policy and the historical amounts written off in the last fiscal year, it is not possible to accurately gauge the performance in this area.