How to Handle Patient AR

Accounts receivable or AR may be a term to denote money owed to your practice for services you’ve got rendered and billed. All payments due from patients, payers, or other guarantors are considered AR. A goal of each practice (indeed, every business) is to manage its AR to make sure that it gets paid correctly in a timely manner. A rise in Accounts Receivable AR from one period to a different is usually a symbol that monies like copays (and increasingly, deductibles for those patients with high-deductible health plans) aren’t being collected upfront. It portends income troubles if not corrected.

The accounts receivable cycle begins with the delivery of service (creation of an account receivable) and extends to receiving cash for services rendered (collection), estimating accounts that can not be collected (adjusting), and recognizing that a specific account isn’t collectible (write-off).

Medical Accounts Receivable: “Days in AR”

The first measure is that the “days in accounts receivable” — the typical number of days it takes to gather the payments thanks to the practice. To calculate days in AR,

• Compute the typical daily charges for the past several months — add up the fees posted for the last six months and divide by the entire number of days in those months.
• Divide the entire assets by the typical daily charges. The results are the times in assets.

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