Keeping Accounts Receivable Under Control and Ensuring Financial Health

With a 21% increase in Accounts Receivable (AR) trends, is your team preparing for impacts on your organization's financial health? We're taking a closer look at aging Accounts Receivable (AR) – a vital indicator often influenced by external factors, like changes in payer behaviors and increasing denials. 

Year-over-Year Changes   

The average number of AR days over 90 days is at 77%, which is a 21% increase from 2024. This upward trend highlights a growing backlog, driven largely by payers taking longer to process payments, and an increase in denial rates. It’s crucial to monitor these shifts as they can have a direct impact on cash flow and operational efficiency.  

The Big Question—How much is this impacting you?  

Staying proactive is more important than ever. If AR is aging beyond 90 days, your business could face significant challenges, ranging from cash flow disruptions to operational bottlenecks. Ask yourself the following questions: 

• Are you keeping tabs on these escalating numbers – what does your AR over 90 look like?  

• How much are we losing with increased AR trends?  

• Do we need to adjust our strategy moving forward? 

The Challenges Behind Increasing AR  

Three primary factors have contributed to the prolonged aging of AR days: 

1. Increase in Denials: Payers are rejecting claims at a higher rate, leaving hospitals to rework claims and delay reimbursements.  
2. Longer Days to Pay: Payment timelines have become less predictable, compounding the AR challenges many hospitals are already facing.  
3. Growing Backlogs: Increased AR days become a cycle, creating a backlog which means it takes longer to get paid.

Both of these factors point to a need for greater operational rigor and tracking around the claims process.  

What Does This Mean for You?  

For hospitals, these insights serve as an important wake-up call. Aging AR leads to resource strain, reduced cash flow, and, in some cases, can even jeopardize the overall financial health of the organization. The good news? These challenges can be tackled with the right approach.  

How to Take Action  

Every challenge comes with a solution. Here are a few ways to address these rising AR trends effectively: 

1. Identify Root Causes: Examine why denials are increasing—common reasons could include incomplete documentation or coding errors.  
2. Streamline Claim Processes: Focus on improving the accuracy and completeness of claims the first time around to avoid time delays.  
3. Enhance Payer Relationships: Regular communication can help you stay ahead of potential delays or process changes on the payer’s end.  
4. Leverage Data Analytics: Use tools that provide real-time insights into AR trends to identify risks early and take proactive measures.  

By addressing these areas, you not only improve AR but also create a stronger foundation for predictable cash flow and business growth.  

Looking Ahead  

This month’s insights emphasize the importance of monitoring these AR trends, understanding their implications, and taking active steps to mitigate potential risks. If you'd like to explore strategies tailored to your organization—or are interested in recommendations on streamlining AR processes—our team is ready to help.