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What is the Process of Outsourcing My Accounts Receivable?

Process of Outsourcing Accounts Receivables


The process of outsourcing a hospital’s accounts receivable or any other medical office for that matter, does not start with handing over accounts and waiting to see what happens next. Instead, accounts receivable management starts with a good amount of planning and understanding what benefits A/R outsourcing will provide a hospital in the first place. When accounts are actually transferred for management, the office will already have a clear plan on what to expect as well as how to redirect resources now freed up from managing accounts directly.

Generally, the basic benefits of outsourced accounts receivable management include collections (pre-collections and/or bad debt), customer service (inbound/outbound calls), ensuring account payments are kept on schedule and current, statement generation in some instances, payment processing, and ultimately keeping patients happy instead of antagonistic. However, there are other benefits as well. Understanding how these advantages can manifest then makes the process far easier to implement.

Business Advantages

First, a hospital that is growing rapidly needs to be putting its core resources into taking on new patients and generating revenues. Chasing down collections pulls people away from what makes the business grow -- because let's face it, hospitals ARE businesses. Accounts receivable management can free up this part of the business and allow hospitals it to get back to what matters - caring for the patients.

Second, a hospital may need more flexibility and a reduction in its operation expenses. This can happen when a hospital OR medical office needs to make changes rapidly for cash flow benefit. Switching over to an A/R service can reduce in-house resource expenses quickly, especially in payroll. In the meantime cash flow is still coming in at the same level or better.

Third, A/R outsourcing helps a hospital deal with business surges without having to hire more people, increasing operating costs and reducing the benefit of seasonal profit bumps.

Fourth, collections can take an incredible amount of energy and time to chase down. That means time taken away from the business office where new patients and accounts are quickly being generated as well as return business from existing patients. Allowing problem accounts to eat up valuable time is not smart business management, and outsourcing these sorts of issues for collection can avoid a lot of headaches and opportunity loss. Just think about all the time wasted sitting on hold with an insurance company to verify a patient’s coverage – let someone else do that! Hospital’s need to realize that outsourcing isn’t the enemy.


Given an understanding of the above, and how these advantages can be leveraged, a hospital can then engage in the process of implementing an A/R system transfer. This starts with finding and choosing an A/R company who will work as a partner with a hospital versus just being a contractor. It makes a big difference, especially if the A/R outsourcing is expected to be long-time in nature.

Next, new business process planning is going to be necessary. Outsourcing of A/R management is going to be a custom set up in any situation. There is no such thing as a default A/R service package. It’s always different. Each business office (or if there ISN’T a centralized business office, your new partnership could act as the CBO) set-up is customary. So the partnership above will be critical to making the custom design work right.

Finally, A/R accounts should be transferred over in batches to allow a smooth transition. A full switch-over often ends up having hiccups, and the business frequently has delays in cash flow as a result. With a migrated series of account transfers, the outsourced support can adjust to the new workload and nuances, and the hospital can identify anything that needs to be changed or done differently along the way.

In Summary

As the A/R service settles in and becomes an integrated part of the hospital, ideas and opportunities for improvement and changes will occur. The client office will be smart to capitalize on these opportunities when they come up, finding new ways to generate efficiencies and smart operations. So transferring A/R doesn't end with the first move; accounts receivable management is an ongoing process of improvement for a healthcare provider. 

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Topics: Patient Pay, patient satisfaction, vendor management, Outsourcing, Business Process Outsourcing