Managing cash flow is one of the biggest operational challenges healthcare organizations face today. Even clinics with a steady patient volume can experience financial strain if claims go unpaid or receivables sit unresolved for too long. That’s why strong accounts receivable management is a critical part of financial stability for any medical practice.
In this guide, we’ll walk through proven accounts receivable management best practices for healthcare organizations, explain why receivables matter in healthcare finance, and outline practical ways clinics can improve collections while staying compliant and patient-focused.
What Is Accounts Receivable Management in Healthcare?
Accounts receivable management in healthcare involves tracking, managing, and collecting payments owed to a medical practice by insurance payers and patients.
This includes:
- Submitting accurate claims
- Following up on unpaid or denied claims
- Managing patient balances
- Monitoring aging reports
- Identifying trends that delay reimbursement
Unlike other industries, healthcare receivables are influenced by payer rules, coding accuracy, documentation requirements, and regulatory compliance. That makes managing accounts receivable more complex and more important for long-term financial health.
Why Accounts Receivable Is Critical to Healthcare Finance
For healthcare financial managers, accounts receivable is a key performance indicator. Poor AR performance can create cash flow gaps, increase administrative burden, and limit a clinic’s ability to grow.
Strong health care finance management depends on:
- Predictable reimbursement timelines
- Low denial rates
- Clear visibility into outstanding balances
- Efficient follow-up processes
When receivables are well managed, healthcare organizations can focus less on financial stress and more on patient care and operational improvement.
Best Practices in Accounts Receivable Management for Healthcare
1. Verify Insurance and Patient Information Upfront
Many receivable issues start before a claim is ever submitted. Accurate patient demographics, insurance verification, and benefit checks reduce errors that lead to denials or delayed payment.
Best practices include:
- Verifying insurance eligibility at every visit
- Confirming referral and authorization requirements
- Collecting copays and known patient responsibility upfront
2. Submit Clean Claims Quickly
Timely and accurate claim submission is foundational to effectively managing accounts receivable.
Healthcare organizations should:
- Use current coding standards
- Ensure documentation supports billed services
- Submit claims electronically whenever possible
- Track payer filing deadlines
Clean claims help reduce rework and shorten payment cycles across both private payers and government programs.
3. Monitor Aging Reports Regularly
Aging reports provide insight into how long receivables remain outstanding. Healthcare financial managers typically track AR by 30, 60, and 90+ day buckets.
Consistent monitoring helps clinics:
- Identify delayed payer responses
- Prioritize high-value or overdue claims
- Spot workflow or documentation issues early
Regular AR reviews are essential for proactive financial management in health care organizations.
4. Implement a Structured Denial Management Process
Denials are inevitable, but unmanaged denials lead to revenue leakage.
Effective denial management includes:
- Categorizing denials by reason
- Correcting and resubmitting claims quickly
- Tracking denial trends over time
- Updating workflows to prevent repeat issues
A structured process helps ensure denials don’t quietly turn into write-offs.
5. Maintain Clear Patient Communication
Patient balances are an increasingly important part of financial healthcare operations. Clear, respectful communication helps maintain trust while improving collections.
Best practices include:
- Transparent financial policies
- Easy-to-understand statements
- Multiple payment options
- Timely follow-up on outstanding balances
Patient-friendly billing processes support both revenue and patient experience.
6. Use Data and Reporting to Guide Decisions
Healthcare financial managers rely on data to improve performance. AR metrics such as days in AR, denial rates, and collection percentages help identify gaps and opportunities.
Regular reporting allows organizations to:
- Forecast cash flow more accurately
- Allocate staff resources effectively
- Support long-term financial planning
Common Accounts Receivable Mistakes in Medical Practices
Even well-run clinics can struggle with receivables if their systems aren’t regularly reviewed.
Common issues include:
- Inconsistent follow-up on unpaid claims
- Lack of ownership over AR tasks
- Outdated payer rules or coding practices
- Limited visibility into aging trends
- Overloading front-desk staff with billing responsibilities
Addressing these gaps can significantly improve the management of receivables outcomes without increasing staff burnout.
How Professional AR Support Can Help
Many healthcare organizations partner with experienced teams to improve accounts receivable management and overall financial performance. External support can help standardize workflows, reduce administrative burden, and provide deeper insights into receivable performance.
Midsouth Healthcare Management’s Accounts Receivable Management services are designed to help healthcare organizations improve collections, reduce denials, and maintain steady cash flow while staying compliant and patient-focused.
Frequently Asked Questions
What is accounts receivable management in healthcare?
It is the process of tracking, managing, and collecting payments owed to healthcare organizations by insurance payers and patients, from claim submission through final payment.
How can clinics reduce unpaid claims?
Clinics can reduce unpaid claims by verifying insurance upfront, submitting clean claims, following up consistently, and addressing denial patterns through structured processes.
Why is accounts receivable important in healthcare finance?
Accounts receivable directly affects cash flow, financial stability, and the ability of healthcare organizations to operate and grow effectively.
How long should healthcare receivables take to collect?
While timelines vary by payer, many healthcare organizations aim to keep average days in AR at 40-50 to maintain healthy cash flow.
What are common accounts receivable mistakes in medical practices?
Common mistakes include delayed follow-up, inconsistent billing processes, poor denial tracking, and limited visibility into reporting.
Let’s Work Together
Whether you need targeted support with receivables or a broader approach to financial management in health care, Midsouth Healthcare Management is here to help. Our team works alongside healthcare organizations to streamline billing processes, reduce unpaid claims, and improve financial visibility.
Contact us today to learn how we can support your accounts receivable and overall practice performance.