Question

Accounts receivables can constitute more than 50% of a healthcare organization's current assets. Managing accounts receivables is critical to the cash flow of the organization. If you were a billing manager what should you consider when implementing credit and collection policies? (Hint: Provide an example of a financial report then explain in detail the steps in the financial analysis process).

Answer 1

As a billing manager I would introduce a cash sales policy where there would be say about 5% discount given on cash sales so as to encourage customers to go in for cash sales rather than accounts receivable. This would also reduce accounts receivable and also reduce the costs associated with collection of sales after the service.

Additionally this being the healthcare sector, most customers (patients) would be using their insurance policies to make use at the hospitals. Since there is a lot of paper work that has to go in before the actual cash is paid out to the healthcare organization from the insurance provider, I would suggest to the management of the healthcare organization to have tie ups with major or leading insurance provider so that the bills that the hospital raises are immediately paid. This puts th onus on the insurance holder (customer) and the insurance provider to sort-out the things and issues and clear the cash for the hospital. This is how most major healthcare organization manage and reduce their accounts receivables.