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In a podcast and article a few months ago, we discussed the concept of AR recovery or accounts receivable recovery. To reiterate what this is, accounts receivable recovery effectively is an outside organization. For instance, whether it’s a billing company, a consulting firm, coming into a provider. For example, looking at all of the outstanding accounts receivable that has been written off, that’s considered dead, putting together a program, and then going after that old AR, and collecting something on those receivables that are considered to be uncollectible, already written off, and dead.

Demonstrate value

There are huge benefits to doing this both for a provider and a billing company. We had talked about a lot of those things in that last one. Please go ahead and check that out! I’m not going to reiterate all those things. The critical thing to know is that this is something that everybody should be doing and should frequently be done.

If you are a billing company, it’s a great way to demonstrate performance rather than making promises in a version to show and prove the performance and collect real money for a provider. The provider has effectively low to no risk at all. These are accounts receivable, they’re considered dead already, so there’s nothing lost if you provide them to somebody. As a provider, this is a great way to consistently look at your financial performance in revenue cycle management and quantify how much more can be made.

Consider collections

We threw out the example in the last one where if you’re collecting a million dollars a month, you could be collecting $1.1 million per month. Not theoretically, not promises from a consulting firm or some billing company, but actual dollars have come in that have dropped to your bottom line, and you’ve seen that performance. Then, you can extrapolate that out over a more extended period.

If they did that for 2020 and we know how much more they collected, we can average that over an entire year and figure out how much more money we should be making. Maybe, there are some things that they couldn’t collect on, but we now have more credibility as either a billing company or a provider than that billing company or the consulting firm, whatever it might be, can do that, can collect on that. If they say they can order an extra 10%, an extra 5%, an additional $100,000 a month, whatever it is, and they collected half of that. It’s plausible that they could collect the other half if they were proactive. They solved things before the problem was created.

Ask what needs to change

No matter what is collected. If you’re a provider and you engage one of these organizations to come in and make AR recovery, maybe they collect absolutely nothing, perhaps they collect a little, maybe they contain an enormous amount of money. Whatever happens, that’s valuable information because you will constantly get promises of improved performance, but very infrequently do you get a demonstration of what can be collected.

If they’re unable to collect really anything, then that tells you a lot. Maybe, you shouldn’t make a lot of changes. Perhaps, things are on an excellent path. Also, you can make some improvements at the edges. Sure, there are always things that can be done to improve. But there isn’t a radical course of correction that’s needed. However, if something substantial is collected, that tells you something. That means that there’s something revolutionary that needs to change.

Look into AR recovery

A good organization that’s coming in and making this AR recovery. It means this is advice to the organizations that are doing this as well as the providers. For instance, in terms of what to look for,) will provide reasons for the collections. Why? Because you need to know why not just the number. If somebody collects $300,000-$500,000 (again, these are all dependent upon the size of AR and the organization’s size), then it just drops to the bottom line. But they don’t explain how they did it, why, or what would need to be changed. There’s very little value to that. Sure, that tells you something. That means there’s a significant problem, but you want to know the why, not just the numbers.

A good organization coming in will be able to share the qualitative information and the quantitative information. If they have good reporting (presumably they will), if they’re able to execute and collect this additional money, then you’ll be able to see precisely what was recovered and uncover why. They should provide not just money coming to your bank account but some report as to what that was, so you can match it up. You can see all the transactions. 

You can slice and dice that data and see, “Ah, they collected off of all of our Medicare Advantage. That’s where most of the money came in,” for example. Then, the analysis will show you what’s different, and you can extrapolate that and use that to go out and look at your annual collections and estimate the future collections if you make those kinds of changes.

Break it down

To make an AR recovery, there needs to be a few things to succeed in doing all of this. One is, we’ve talked about in the past, ETL (or extraction, transformation, and loading), so getting all the data out of somebody’s system, cleaning it up, manipulating. Then, you have to slice and dice the data to not only predict and determine what we think somebody’s going to collect off of that, all of the AR, and estimate that. 

However, you’re going to slice and dice that based upon prioritizing what to go after, meaning go after primary versus secondary, patient AR, how old it is (the older stuff is going to be less collectible than the newer stuff), and coding kind of information. Again, somebody may have some external rules to help translate this into analytics to use, apply to that dataset, maybe even additional documentation or lookup tables related to contract status by individual payer, and more.

There’s a fair amount of analysis that goes into a successful AR recovery program. It’s not only in terms of prediction but actual execution to collect more money. Further, the follow-up to provide that information as the output. You might sort of say, “Hey, we collected an extra $200,000 for you, and here’s the summary of it. Here’s some data and slicing/dicing of that to show you not only what was collected. It also conveys what can be done in the future.”

Check out our templates 

Just as a side note, this is the subtle plug for Apache. We have some templates that help with all of that . They’re in terms of data extraction to get all of that information out and clean it up from different systems. Hence, whether it’s AdvancedMD, eClinicalWorks, Epic, and more, however, some of that pre-processing work to help make that AR recovery to put together the analytic framework and prioritize primary, secondary, older, newer, all that kind of stuff. 

Even some business rules can be incorporated into that. You might say, “Okay, once you’ve done a few of these, you may know, “Hey, off of this category of, it’s secondary. At this age, we’re going to collect 11% of that. This, that’s newer and primary, we’re going to collect 17%, or 23%, or 26%,” or whatever it might be. You can start to incorporate those metrics to come up with a prediction ahead of time. Also say, “Okay, if they’ve got an outstanding 5 million in debt AR, we think we’re going to be collecting $423,000 off of that.

Final thought

Get in touch with us! If you’re interested in looking at that kind of stuff, we’re happy to do that. Those are programs that we put together quite nicely. We look forward to seeing how you guys perform on that AR recovery. If you have any questions, get in touch with us. Otherwise, we’d love to help out, and we’d love to hear how it’s working for you.