6 Ways For Small Hospitals to Improve Cash Flow
Small hospitals are always on the look-out for new ways to can cut their expenses. This is partly because hospitals, in general, are very expensive to run, and also because small hospitals, in particular, don’t often have many ways to increase their revenue.
There is, however, some opportunity to develop effective revenue cycle management strategies. This might be a bit difficult for small hospitals, but there are definite ways that they can improve their cash flow, even without the same options that large healthcare organizations may have. The following 6 strategies can help small hospitals improve their cash flow.
Train Employees on Collections Protocol
Often hospital employees aren’t up to date on protocol when it comes to collections procedures. This can lead to costly missed payments which can then add up and heavily detract from potential revenue. When everybody at a hospital knows what his/her role and executes it to the fullest, payments will start coming in much faster.
Improve the Collection Process
You should not wait for any extended period of time before billing your patients. In order for cash flow to be maximized, billing needs to happen immediately after services are rendered. It almost goes without saying, but the faster you bill, the sooner you will get paid. You might think that as long as the bill goes out it doesn’t really make a difference how long it takes, as long as your accounts receivable are paid in full, but a delayed payment schedule will always conflict with revenue cycle goals.
Take Electronic Payments
While it can seem like a waste of money to invest in electronic payment systems if you already have a functioning payment system, the investment is none-the-less well worth it. Almost everything is switching over to some form of electronic or digital means of transaction within today’s world, and refusing to evolve along with this trend will only hold you back. Many people expect to be able to pay electronically for almost everything and could be much more inclined to miss payments if there is no electronic option available to them.
Electronic payment systems are also faster and more accurate. This goes hand in hand with improving the collection process as it naturally increases the speed of receivables when customers and other types of debtors can get their payments in much more quickly and with far less fuss than through the use of other more traditional types of payment systems.
Restructure the Costs for Expensive Procedures
If you currently offer any procedures that are very high cost but low return, you need to negotiate their prices with your supplier. Let them know that your numbers are currently showing a huge money drain on these procedures and that prices either need to drop, or the providing of these procedures will be discontinued. There is absolutely no risk on a hospital’s part here either; if your supplier decides to cut ties because you refuse to throw away money, you can find another one. Even if they can find another hospital to buy their services, they will often come back to you and be more than willing to negotiate.
Renegotiate Your Current Contracts
While we’re on the topic of negotiating, you should also renegotiate your existing contracts. If you owe debt to your suppliers, try to renegotiate the terms on your contract so that you can receive extra time in order to pay off those debts. Getting an extended grace period on your debt will allow you to pay less of it off at a time, which will increase your cash flow in the short term. Just be careful about agreeing to new interest rates or other fees associated with negotiating your terms.
Hire a Revenue Cycle Management Company
One surefire way to improve your cash flow without having to really get into any details on your own is to hire a revenue cycle management company like eReceivables. There can be many different things to delve into when it comes to improving cash flow, and a professional company like eReceivables has experience in getting right to work on the most crucial aspects of revenue cycle management. It can offer many solutions to complement your current strategy, such as day one billing, receivables financing, and claims follow up. It’s very often the case that a small hospital, in particular, will end up receiving a very large return on its investment after hiring a revenue cycle management company like eReceivables.
Small hospitals can have a difficult time improving cash flow for many reasons. While there are a handful of strategies they could employ on their own in order to boost their cash flow and cut unnecessary expenditures, hiring a professional AR management company to run things like the appeals process, billing claims, and the denials management process can be highly instrumental. This frees up employees to dedicate 100% of their effort to their jobs and leaves the top-end details to the pros.