Carolina Home Medical Slashes AR by 46.3%
For home medical equipment suppliers, collecting from patients is one of the toughest aspects of the business and one of the most undesirable tasks for billing staff. At Carolina Home Medical, providing hometown patient care and attention is paramount. Unfortunately, Carolina was experiencing the margin cuts of the HME industry and was being forced to do a better job collecting from their longtime customers. Billers were being challenged with the task of billing Medicare and third party insurance while also trying to improve patient billing and collections. Carolina was using the Brightree system to manage their business and make them more efficient, but even with their best efforts AR was continuing to grow. Carolina was finding what many in the HME industry are facing — they just didn't have time to adequately manage their AR.
Short of hiring more resources, which is a tough decision given the constant changes and uncertainty that HMEs are facing, Carolina felt that they needed better tools and better time management — something to make them more effective at collecting AR.
Ineffective Statements and Costly Follow-Up
It seemed as though it was costing a fortune in time and postage to review patient bills and get them out the door. The statement format was in many cases confusing to patients and lacked a due date and remittance slip to encourage payment. Additionally, since the statement included all open charges, it quickly became overwhelming for the patient and caused either incoming calls to review charges or worse yet, patients simply ignored the bill. Patients would be especially confused when some items showed credits/payments while other items on the bill did not. Patients interpreted this as insurance not having paid and ignored this bill, waiting for next month's statement to roll around when hopefully, in the patient's mind, insurance would have paid more. Since statements were not working, Carolina was forced to take additional steps to attempt to collect from patients.
Carolina tried a variety of methods to improve their effectiveness at collections. The growth in AR was alarming enough that Carolina made a decision that all accounts would be worked. Billers were tasked with reviewing each monthly statement and account. Non-paying accounts were forwarded to the retail branch managers in hopes that customer contact with the retail location would encourage payment. Unfortunately, the managers needed to be focused on improving sales and were not especially excited about adding collections to their already demanding task of running the business. Any improvement seen was not satisfactory and AR continued to grow. Next, Carolina required billers to make ten outgoing collection calls each day. Although patient payments improved somewhat, overall AR actually worsened. Billers simply did not have the time to review statements and make calls while trying to bill and resolve insurance claims. Insurance billing was being sacrificed to improve patient collections. Although Carolina was doing seemingly all the right things, their efforts were not meeting the needs in an industry where margins seemed to be slashed daily.
Changing Patient Behavior
When considering alternatives to improve their situation, Carolina Home Medical most importantly needed a way to improve their efficiency without adding additional cost or labor. Carolina liked the advantages that Brightree offered and needed a solution that would complement their HME management software. Even though Carolina services a large portion of North Carolina, they also wanted to keep their hometown feel. It was important for them to keep patient contact in house for better customer service and therefore they did not want a third party taking calls from their patients.
Upon viewing a demonstration of the AR Dashboard, Carolina learned the follow-up process that they felt would get their patients to pay. They saw that invoices would make it to patients without delay and with no involvement or labor on their part. Consistent, automated past-due correspondence that gets a little tougher as the patient account ages would encourage patients to pay and would reduce time required to review accounts. The efficiency that the AR Dashboard would bring to their process along with the convenience of Brightree integration convinced Carolina Home Medical that they needed to give it a try.
The impact of using Strategic AR Solutions was immediate. Stacks of payments were coming in the mail days after invoices were sent. Rather than waiting until month-end to get statements to patients, they were now receiving invoices as soon as the insurance portion had paid. The biggest impact according to Sherri Brown, Billing Manager, was that patient behavior had changed — "patients respond and now pay promptly." Patients also reacted positively to the change and appreciated the simplified, more professional invoices. They liked that the invoice matched the recently received EOB, which gave them the security that the bill was correct and the confidence to pay. Brown cited the simplified invoice format with a clear due date, along with consistent follow-up that includes appropriate messaging and a late fee as key reasons for the change in patient behavior. Now that patients understand their bills, call volume has dropped significantly and Brown's staff is able to process more claims instead of helping patients reconcile their statements. Now if the occasional patient has a question it becomes an easier phone call because problems can be resolved more quickly using the invoice number than it was with a complex monthly statement that included multiple claims and credits.
Simplified Management of Patient AR
Besides completely eliminating the time and effort in getting bills out the door, Carolina Home Medical finds it much easier to manage patient balances with the AR Dashboard. The AR Dashboard provides a single, comprehensive view of Patient AR via interfaces to all major HME management software. Brown is able to see exactly what Patient AR is doing, without running and reviewing aging reports. Patients that need attention are displayed on the Dashboard and action can be taken with the click of a mouse. Since the AR Dashboard breaks down Patient AR by branch, managers are able to better manage their individual locations and take action on or modify policies when they see their patients not paying.
Brown especially likes the ability to establish payment plans for patients that cannot pay their entire balance. "We really had no way to track before, we would have to review notes on each individual patient and see if they were keeping current," noted Brown. Now a patient can be set up on a payment plan in seconds. An initial terms letter, ongoing payment reminders, and late notices are automatically sent through the Dashboard. Additionally, patients are displayed on the Dashboard according to their status of "Current" or "Late", allowing Carolina to know exactly which patients might need special attention. Carolina is able to reduce the number of accounts going to collections using this feature and finds almost 90% of patients staying current with their payments.
Significant Efficiency and AR Improvements
After initiating the AR Dashboard solution, Carolina Home Medical has witnessed significant results in efficiency and cash flow turnaround. "Prior to Strategic AR, our AR was up to almost a million dollars — and that was only the over 90 AR," remarked VP of Operations Dale Cross. "Now we've basically cut that in half."
For Brown, the results of using Strategic AR have been fantastic. No longer spending valuable time working Patient AR, Brown's staff is able to focus on higher payoff insurance billing. Outgoing collection calls to patients are a thing of the past; it simply is not cost effective given the results they get from the new patient correspondence. Brown estimates that Strategic AR's services have essentially reallocated the equivalent of three FTEs, resulting in a huge improvement in efficiency. The company is now constantly aware of what Patient AR is doing at any given time, providing peace of mind, a sense of control, and more effective business management. "We are making money," remarked Brown. "It is comforting that Strategic AR knows what they're doing. Patient AR is now in good hands."
