The Future of Health Data: Accounts Receivable Automation Explained

Overview Of Accounts Receivable Automation

Accounts receivable automation automates repetitive tasks to collect money from patients. Patients owe this money to hospitals. Automated software replaces the manual tasks involved in managing accounts receivable. Automation optimizes financial transactions between hospitals and patients. You can also use automation to speed up your revenue cycle. It manages how patients avail medical services and hospitals receive payments.

Accounts receivable automation has several variations. The replacement of manual tasks determines these variations. Some automated software only work for specific aspects of accounts receivable.

These aspects include digital invoicing and billing. Other automated solutions work on end-to-end processes like charge entries and revenue cycle. These processes need management reporting.

A comprehensive automation of accounts receivable leads to efficiency and accuracy. It also increases patient satisfaction and results in faster medical reimbursements.

How Does AR Automation Work?

The workflow of accounts receivable automation differs between hospitals. It primarily targets three medical processes. They include invoicing, collecting payments, and reconciling both of them.

Automation optimizes them and generates timely invoices. These invoices meet the accounts payable requirements for your patients. It also decreases the number of input key data points. Some of these points include details about medical invoices and payment terms.

You have to enter this data into your system for each medical payment. The data will follow the relevant patient account throughout that payment process. Automation also generates and delivers invoices to patients on the billing day.

Automating accounts receivable also includes tracking different payment types of patients. You can match medical invoices to the relevant services. It also monitors various aspects of the collection, like flagging expired credit cards.

Hospitals enable early payment incentives for their patients. They also charge fees against late payments. An automated database gives real-time reports about the status of medical invoices. This way, you can send automated communications to your patients.

Why You Should Automate Accounts Receivable

You should automate accounts receivable as it manages your pending money. Your revenue cycle depends heavily on your accounts receivable management. Automation enables key healthcare functions like days sales outstanding and patient dispute resolution.

Days sales outstanding refers to the number of days for medical payment collection. The following are the main reasons for implementing accounts receivable automation.

1. Time And Human Effort

Automation builds logic around your accounts receivable process. It determines which patients to charge and how to charge them. You can also install automation to set the timings and medical services to charge.

You can take the example of a regular patient in your hospital. They smoothly avail their first medical service from you. But, they may want a financial change with their second healthcare procedure.

This can be a discount or payment plan, depending on their financial position. Hospitals have to manage many patient cases like this simultaneously.

You cannot manually handle them. Automation saves time and human effort in managing your accounts receivable.

2. Cash Flow And Debt

Automation also ensures a predictable cash flow and minimizes bad debt for hospitals. You cannot accurately predict your future financial position without automation.

You can automate payment notifications, reminders, and emails to ensure timely payment collections. It enables you to stay ahead of your collections process. Your cash flow is likely to remain consistent with fewer bad debts.

3. Visibility And Informed Decisions

You must automate your accounts receivable to gain visibility and make informed decisions. Hospitals usually use their highly potential AR insights for these functions.

You can use the interactive analytical dashboards of trending automated solutions. Such dashboards give accurate and helpful information.

Your KPIs and cash flow reports determine this information. You can also focus on the collection effectiveness index to make financial decisions.

4. Patient Satisfaction And Experience

Automation provides more payment options and encourages fast payments. Medical processes like these are bound to increase your patient satisfaction and experience.

It also reduces your healthcare costs and frees up working capital. You can gain rich data through automation for payment tracking.

Furthermore, you can make it easier for patients to fill their medical invoices. This way, hospitals can quickly complete your payment process.

Automated AR processes help hospitals save days on their days sales outstanding. You can also process your functions faster and boost team efficiency.

Key Features of Accounts Receivable Automation

Hospitals have to maintain accurate and efficient accounts receivable. They also want to make medical payments easy for their patients. There are various key features involved in achieving these outputs.

1. Invoice Generation And Distribution

Generating and distributing invoices is a major process associated with accounts receivable. Automated software can easily execute its tasks.

You can manage your invoices to speed up payments. It also improves the cash flow for many hospitals.

2. Automated Emails

Automated emails are also called the “set it and forget it” feature. They allow medical practitioners to program specific triggers for generating emails.

These emails can notify patients several days before their payment is due. You can even use them to contact your patients again. This action becomes necessary when an overdue payment is late.

3. Transaction Matching

You have to apply the incoming medical payments to the correct account. Prominent AR tools can match patient transactions to open invoices.

This action reduces days sales outstanding. It also limits the manual effort required to execute revenue applications.

4. Multiple Points Of Payment

The accounts receivable automation process provides many points of payment for patients. This feature increases their flexibility to pay for the availed medical services.

Prominent payment methods include checks, automated clearing house, and credit cards. Patients should also be able to wire transfer payments. You can look into enabling them to use peer-to-peer sharing platforms as well.

5. Credit Risk And Management

Hospitals usually have to take some risk when providing their medical services. They invoice their patients on credit. You can use automation to identify patients most likely to make late payments.

Healthcare organizations can also track those patients who may default on their payments. This way, you can check patient behavior trends.

6. Disputes And Deductions

You may occasionally have to deal with challenges from your patients. These challenges are primarily based on the charges on their invoices.

Hospitals deduct the disputed charges and re-invoice their patients as a solution. You can also automate your accounts receivable to speed up this issue resolution. Also, you can reduce the wait time to ensure timely payments.

7. Data Reporting

Automating accounts receivable also involves reporting and analytics. This feature uses real-time intelligence and data analysis to detect payment trends. It manages risk prevention and tracks your days sales outstanding.

You can execute data reporting to parse patient data based on a specific category. Hospitals can also track the productivity of their healthcare processes.

They can analyze the number of medical invoices created or collection calls completed. These outcomes need you to sort your individual staff members.

Benefits and Drawbacks of AR Automation

Hospitals can make their job easier with AR automation. Automation can limit tedious manual tasks and simplify their work. It offers various financial and organizational benefits.

1. Streamlining AR Workflow

Automation reduces the time spent on processing medical paperwork and payments. It creates a more efficient workflow for healthcare organizations. This way, you can focus more on your strategic healthcare processes.

2. Facilitating Cash Flow

Reduced time in executing the workflow leads to faster medical invoicing. You can generate faster payments and improve cash flow. Hospitals can also decrease their days sales outstanding.

3. Reducing Costs

The implementation of e-invoicing reduces paper and ink usage. It also increases storage space in hospitals. This way, you can cut down on your postage and delivery fees. Automation also saves medical finances in other ways.

It lowers labor costs for medical tasks in hospitals. You can also reduce the number of write-offs for unpaid medical invoices.

4. Increasing Accuracy

Accounts receivable automation also decreases human error and improves data consistency. These outcomes result in less duplication of medical invoices. You will also encounter fewer billing disputes and happier patients.

5. Improving Patient Satisfaction

Automation ensures that hospitals have fewer issues with medical billing and payment reconciliation. These features keep patients satisfied with your healthcare services.

They begin to trust your hospital and visit more in the future. It also shortens your time to deal with patient complaints.

Automating accounts receivable also has some drawbacks for healthcare organizations. As a result, some hospitals still hesitate to install it. Let’s take a look at some of the common disadvantages:

6. Difficulty Of Use

Switching to automation can be a drastic change for hospitals. It depends on the manual processes currently running in those hospitals. Hospital staff may need some time to adjust to the new automated software.

7. Loss Of Control

Many hospital managers express concern over losing control with automation. They fear that they may not have to do much on their own. But you can tailor automated software to include your procedures in its implementation. 

This way, automating accounts receivable may increase your control instead of decreasing it. You can automate your processes so that your staffers do not have to intervene.

8. Cost Of Implementation

You may have to incur the heavy costs of automating your accounts receivable. These costs primarily include the software and the expense of training your employees. But, hospitals can cover these costs from the savings resulting from increased efficiency.

How to Implement AR Automation

There are around six steps involved in the complete implementation of AR automation. Let’s take a look at them in detail:

1. Consulting With Stakeholders

Medical practitioners must initially consult with all the stakeholders involved. This way, you can learn how to smoothly transition to automation.

You must also discuss automation with your patients to gather their input. After initiating automation, you can check back with them to assess their thoughts.

2. Clarify Automation Goals

Hospitals should clarify their goals for implementing accounts receivable automation. You can have both long-term and short-term medical goals.

An example of a long-term goal can be the expansion of your patient base. You may also want to create new roles for employees in the short term.

3. Integrating With Accounting Software

You must integrate automated AR software with your existing accounting software. This integration organizes and aligns your existing AR data with the new system.

4. Automating Payment Reminders

The main goal of accounts receivable automation is payment collections. So, you must set up automated payment reminders. They should target patients with overdue payments.

As a result, these reminders are beneficial as they save you time. You are in control of determining the timing to send them out.

5. Payment Options

Hospitals must also enable several ways for patients to pay their medical bills. Patients should easily identify the ideal platforms and methods for their payments. Then, you should execute those decisions and put their software options in place.

6. Reconciling And Reporting

You should ensure a regular reconciliation of your accounts receivable. This way, your reminders will not confuse your patients in case of overdue payments.

This outcome is important in case of already reimbursed medical services. You can also use the reconciling process as a reference point.

This point will assess the workflow of your automation. As a result, you will be able to make any necessary adjustments.

Choosing the Right Accounts Receivable Automation Software

The right AR automation software will fit your organizational and financial needs. You can get input from your relevant employees to start the service evaluation process.

Your employees are aware of your accounting workflow. They can help you to determine unique software requirements for your accounts receivable. You must also point out any AR issues and find their solutions.

The right software should completely integrate with your accounting system. This way, you must be able to use it to generate medical invoices. All countries of origin should support it in the case of international medical services.

The Bottom Line

This blog focused on various aspects of accounts receivable automation. We discussed top considerations for hospitals to automate their AR processes.

Health Quest Billing provides exceptional AR automation services. Contact us today to learn how you can upscale your accounts receivable processes.