What does the financial condition of your healthcare organization look like these days? During the pandemic, you invested significantly in people, equipment, and patients with support from government programs to ensure the viability of your organization. Coming out of the pandemic, while the spending continues, are these costs eating up reimbursement at unprecedented rates? Are volumes meeting or exceeding the plan, yet margins continue to suffer? How can you plan for capital expenditures when leading indicators point to retrenching? Even the largest and most sophisticated healthcare companies with resources devoted to accounts receivable (AR) performance tracking likely have opportunities for renewed or refreshed analysis in this area.  

The application of tools such as AR cash waterfalls and zero-balance account (ZBA) calculations/analysis can be extremely meaningful and bring valuable insights to all levels of the organization around cash collection opportunities and financial reporting accuracy. To assess your level of sophistication and precision in AR & revenue valuation and analysis, and whether building or enhancing AR cash waterfalls and ZBA calculations could be helpful, the following are some considerations around this critical, risky, and subjective area:

• What might certain data points indicate about revenue cycle operations? Is cash being left on the table?
• Is there an opportunity to review revenue cycle performance and processes?
• Do meaningful revenue cycle KPIs exist? If so, are they tracked, and do cross-functional teams have visibility (including revenue cycle, accounting, managed care/contracting, and operations)?
• Who is paying attention to revenue cycle performance and who owns issues and remediation?
• Are there unusual or surprising discrepancies between what you expect to collect and what’s coming in the door?
• How much visibility does everyone have into denial and short pay rates, what is the actual cash impact of these, how much of these are avoidable, and what can you change in the short and long term to get more cash (which you are entitled to) in the door?
• What could certain analyses bring to light around the strength of what’s being recognized in the general ledger and financial statements for revenue and AR?
• Does your organization consistently experience higher than expected out of period revenue and AR adjustments, peaks and valleys in physician compensation calculations/accounting, and/or repeated conversations with sponsors, lenders, operations, providers, etc. around “surprise” fluctuations in financials?
• Are revenue and AR adjustments experienced during the financial statement audit, quality of earnings analyses, etc.?