In 1998, Queen of Peace Hospital in New Prague, Minn., was trying to cope with the extended time payers were taking to settle their accounts.
The increasing number of revenue days outstanding alerted the hospital's chief financial officer, Paula Starkey, to what she considered a potentially grave cash-flow problem.
Starkey says that historically the hospital's average number of days outstanding had remained in the high 50s, but by June 1998 it had climbed to 75.
"I was looking at how I could bring those days back down, but I wanted to fix the root cause of the problem," she says. "I didn't just want to do a one-time fix and two years from then be right back up there."
Starkey ended up hiring Sandra Beimfohr, president of Beimfohr & Associates, a consulting firm in Elmhurst Ill., to help tackle the problem.
Today, in the wake of some recent staff turnover, days outstanding at Queen of Peace are back down to the low-60s, and the situation is "remarkably better than it was," Starkey said.
She and Beimfohr will discuss accounts receivables management at a session of the Healthcare Financial Management Association's annual meeting from 2: 30 p.m. to 4: 30 p.m. Tuesday, June 27.
The session aims to inform attendees how to get the most out of receivables management.
For most healthcare providers, receivables make up 75% of liquid assets, Beimfohr says.
"It is a critical component of cash management," she says.
Beimfohr focuses on benchmarking as it applies to accounts receivable.
"The main point is that accounts receivable cannot just be measured by days outstanding," she says. "There are building blocks that measure efficiencies and effectiveness, that lead to days outstanding and all of the components that need to be measured in order to have an effective evaluation of the financial position of the receivables."
In fact, just looking at days outstanding can be misleading, she says.
Starkey agrees. At Queen of Peace, for example, billers were fixing a lot of errors manually.
"But every manual fix you have to do or remember, you run the risk that you might forget sometime, or someone new comes in who doesn't know how to do that," she says.
Now, the hospital's systems have been tweaked so that they catch those mistakes before they ever get into a bill, which allows staff to fix them at the front end.
Both Beimfohr and Starkey say the ultimate goal of accounts receivables management is getting the cash faster.