3 Reasons Why You Need to Track Insurance and Patient Aging
An important aspect of owning a business and a practice is knowing what performance indicators are necessary to track in order to make informed decisions about the business. For practices, tracking the aging reports for patients and insurance can be vital when making decisions.
Here are 3 reasons why you should be tracking the patient and insurance aging:
1. Tracking your aging gives you an idea about cash flow
The critical factor to keeping a business afloat is cash flow. Without cash flow you can't pay bills, make payroll, or keep the lights on. By monitoring your aging, you can predict when money will come into your bank account and manage your finances efficiently.
Tracking your aging helps you to identify when your business will have a lot of cash or be short on a given month. This is especially important since the income of the practice is variable.
2. Tracking your aging indicates the performance of your biller
If you get an aging report and there is money that is chronically past 120 days or the amount past 90 days is trending upward, then you know you have a problem with your biller that needs to be rectified.
This can indicate an issue with claims, client information, or even other business processes. This can be a great preventive action to protect yourself against having a cash shortage or even other conflict with your biller.
3. Tracking aging indicates the financial health of the practice
A healthy practice shouldn't have more than 25% of its outstanding money older than 120 days. If this number exceeds more than 25% there is a significant issue that needs to be fixed. The problem with having more outstanding than 25% means that if you have to write-off that amount, you don't want the outstanding to be more than you can bear.
If you aren't receiving an aging report from your biller, then you should request they send you a monthly report showing you progress. If you are monitoring your aging, be sure to look for trends over the period of a year or couple years. From there you can make business decisions for the betterment of your practice.