Three Pillars To Managing Low-Dollar AR

august 16, 2023
Kyle Sherseth



If a primary care practice is avoiding management of low-dollar accounts receivables (AR), the first question to ask is: Why? Yes, the volume is higher – often much higher – than “normal” AR, and, as the name implies, the dollar value for each account is low. Cumulatively though, there is tremendous value in effectively managing and resolving these balances. Our data shows that up to 80% of open hospital insurance accounts fall under the low-dollar designation and account for as much as 15% percent of outstanding revenue. When it comes to physician groups, all AR is inherently low dollar, so developing an effective work strategy is vital to financial success. This is especially true for independent physicians in private practice that don’t have access to the same resources as large physician groups.


In general, the approach to low-dollar AR at health care organizations is poor as internal teams often ignore these accounts for larger balances that have a better return on the time spent to collect. While this may make sense from a resourcing perspective, there are a variety of ways to close the gap to collect these high-value balances rather than leaving money on the table.


Instead of dismissing that critical 15% of revenue, there is a three-tiered strategic approach to profitably managing and effectively resolving low-dollar AR.


Pillar 1: Apply deep analytics to low-balance AR


Data can not only tell a story but can also provide a roadmap to manage low-dollar balances. Use data to identify accounts with the highest potential for collection, and to understand the right times to collect based on timely filing limits and historical payer turnaround time. Understanding the patterns of specific payers will significantly improve AR strategy and drive collection efforts. For example, the development of mindful account segmentation can help tier low-dollar accounts by identifying meaningful populations and the ability to collect from these populations.


Pillar 2: Add automation into the collections mix


The growing sophistication of automated systems greatly enhances revenue cycle management (RCM) and collection efforts. Strategic automation helps to pursue payers more efficiently and can handle repetitive administrative tasks such as account adjustments and status updates. To mitigate the staffing shortage – another big factor in why health care organizations look past low-dollar AR – automation helps remove people from simple follow-up tasks. Adding relevant APIs to payer portals can help generate up to a 3x output. The result? Fewer people touch low-dollar AR and profitability of collections increases. For example, automated phone calls can be a powerful tool to free up resources for more valuable tasks.


Pillar 3: Use offshore resources


Given the financial and staffing challenges health care is facing today, offshore resources are more than a viable option, they are a necessary one. When fully understood and employed in the right areas of an organization, it can benefit the bottom line. With regard to revenue cycle management operations, offshoring results in numerous benefits beyond cost savings, such as a broader approach to RCM, reduced cost to collect, and decreased recruiting and retention challenges by sourcing skilled resources from a global talent pool. This results in improved cost margins with the same level of output. When implemented strategically and correctly, offshoring follows the same processes as all other AR efforts and results in the same productivity. Other factors include a high security compliance program for offshore offices and the ability to create a “follow the sun” global operation to squeeze more productive time out of every workday. Look for partners that can add immediate value and offshoring capabilities to hospitals (which do not typically have offshore options internally).


It's time to embrace low-dollar AR. Why pass on collectible revenue? There is high value in creating a plan to collect low-dollar balances now. And it can be done effectively, efficiently, and profitably by adhering to the three pillars of low-dollar AR above.

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