5 Ways Outsourcing AR Increases Healthcare Practice Success

Outsourcing accounts receivable makes sense when you consider that in the typical multispecialty practice, almost 17% of accounts receivable have been outstanding more than 120 days. Ideally, that figure should remain below 12%.


Outsourcing accounts receivable can help you shorten the healthcare revenue cycle.

Eighty-three percent of hospitals turn to outsourcing accounts receivable to some extent, and 68% of large physician groups (those with more than 10 practitioners) outsource at least some collections and claims management tasks. Results are impressive, with most hospitals that outsource accounts receivable seeing revenue increases of over 5%. Here are five ways outsourcing accounts receivable increases the success of healthcare practices.

1. It Allows Attention to Process Issues Rather than “Putting Out Fires”

When a healthcare provider outsources accounts receivable, they can focus attention on internal process improvements, without worrying that a short-term issue related to accounts receivable will divert attention from important functions. Outsourcing accounts receivable allows practices to spend more time on their core business practice of providing healthcare services, and less time on collections.

2. Outsourcing Ensures Trained Specialists Handle Your Accounts Receivable

When you outsource, assuming you choose a high quality provider, you can be confident that the people handling your accounts receivable are fully trained for every aspect of that responsibility. Managing accounts receivable in-house often means that people with many other responsibilities are assigned to follow up accounts. It’s all too easy for attention to accounts receivable to be diverted elsewhere.

3. It Allows You to Avoid Personnel Crises

Suppose your small practice has one or two staff members assigned to manage Accounts Receivable. What happens if one of them leaves? Suppose both are out sick for several days. How far behind might your practice become in terms of cash flow? When you outsource accounts receivable, however, these worries go away. Your provider ensures that sufficient numbers of trained personnel are available to devote attention to client accounts at all times.

4. A Top Provider Reduces Fears About Audits

The Office of the Inspector General (OIG) isn’t going to stop auditing practices to guard against fraud and abuse. If the idea of facing an audit elicits dread, then outsourcing accounts receivable may be a positive step toward addressing that fear. Proper management of your billing functions, including accounts receivable, is essential to being prepared should your practice be the subject of an audit.


The right outsourcing partner helps allay fears about coping with audits.

5. It Saves Healthcare Practices Money and Time

Healthcare practices outsource accounts receivable for obvious reasons: It saves money and time. You don’t have to hire staff and equip them with the tools they need to take care of accounts receivable, but are able to leave that to specialists devoted solely to that endeavor. The time and money you save can go toward building core business competencies, expanding your practice, and strengthening relationships with your patients.

Metrics That Indicate Outsourcing Accounts Receivable Is the Right Move

You can spot check a few key metrics to get an idea of whether outsourcing accounts receivable is your smartest choice:

  • Cash collections as a percentage of adjusted net patient service revenues – which is an indicator of overall revenue cycle management effectiveness
  • Claim denials as a percentage of net revenue – which can indicate trends in how much lost reimbursement is written off
  • Bad debt as a percentage of net revenues – which shows how well your self-pay collection and financial counseling are working

Accounts receivable tasks result from actions taken by patients, coding and billing staff, and clinicians. Every department involved even tangentially in revenue cycle management contributes to the tasks that Accounts Receivable must cope with. Hospitals and physician practices of all sizes have discovered the advantages of outsourcing accounts receivable and have experienced improved revenue cycle management as a result.

When you outsource accounts receivable, you address numerous pain points of the revenue cycle management process. At HFS, we have over 15 years of experience working with hundreds of healthcare organizations and streamlining revenue cycle management. Our hands-on approach to outsourced accounts receivable, coding, and compliance have helped us build a solid reputation as experts on leveraging service and technology to improve revenue cycle management. We invite you to contact us at any time to discuss your requirements.

Author: Emma Chung

Twenty-five years experience in Revenue Cycle. Twelve years directing Patient Access and Patient Financial Service functions in various sized healthcare systems and physician practice networks. Additionally as a consultant I managed numerous successful projects overseeing assorted aspects of revenue cycle assessments and process improvement implementations. Served as featured speaker on various revenue cycle topics for AAHAM.