The health care community has had to weather a wealth of storms of late, especially given the changing composition of the American population, the endless stream of major legislative overhauls, more acute patient expectations and higher levels of competition. One of the areas of business that has always been tough for hospitals and other medical facilities is accounting, where accounts receivable, accounts payable, collections and other functions can be tricky, arduous and frustrating.
"Hospitals face unique accounting and collections challenges."
Add to that a talent and skills gap that has made it more difficult for organizations to find enough employees and remain fully staffed, and it should become clear that something needs to give. In fact, CFO magazine stated that accounting and finance departments across industries have been plagued by such skills gaps, with many having a hard time finding staff members who are strong at reporting internal reporting matters, handling cost management, and taking care of corporate finance.
One of the ways that the world's organizations have worked to overcome these problems is through outsourcing. According to Ibis World, the market for outsourced business process services increased at a compound annual growth rate of 4 percent between 2010 and 2015, reaching $136 billion in revenues. Let's take a look at why outsourcing accounting services might be the best option to overcome accounting and collections challenges in the modern health care environment.
Why outsource accounts receivable collections?
Hospitals obviously deal with some of the most sensitive matters of all, making collections an entirely different animal than what would be the case in other types of industries and organizations. The Tennessean reported that hospitals have had a problem with accounts receivable, only recovering about 65 percent of what is owed to them. That is 45 percent or more of revenues lost due to issues with accounts receivable and collections, and now is certainly not the time to have cash-flow issues in the industry.
Becker's Hospital Review reported that hospitals spent 4.1 percent more in 2014 than 2013, reaching $971.8 billion and outpacing historical averages of growth. Suffice it to say that this has only gone up since 2014, as the Patient Protection and Affordable Care Act further catalyzed increased expenditures among health care providers across the sector.
Those two stats show that hospitals and other medical facilities are at once struggling to collect everything they are owed and at the same time facing higher costs with the passing of each year. This can hemorrhage a range of projects and processes, making it all but impossible to run operations efficiently and properly. A cash-flow issue is the first step toward some serious problems in health care, but it can be avoided by leveraging the support of professionals who specialize in medical collections and billing.
Plenty to be gained
Business 2 Community contributor Alleli Aspili argued that outsourcing accounts receivable can reduce costs associated with accounting and collections, streamline the workflow involved from invoicing through the payment clearing and put the focus of in-house employees on more strategic matters. The first two are tangible benefits that many organizations that choose to outsource their accounts receivable enjoy, and the third, while more indirect, is just as important.
When staff members who would otherwise spend their days making calls and trying to track down patients for payments can take a more analytical approach to their jobs, they will be more valuable to the hospital. From improving cash flow to strengthening overall operational efficiency, collections and accounts receivable outsourcing services can have a profoundly positive impact on a medical organization.