AR for Consistent Cash Flow
By: Chad Bixler
In this article, we will demonstrate why having a consistent, true, and low Accounts Receivable (AR) is the life blood of a practice. While doctor(s) and staff are the heart of your practice, we all know how vital it is to have consistent cash flow. Regardless if you are a past, present or future partner with SMB Medical Billing, our mission is to make sure we give you the tools, guidance and value your practice needs to financially succeed.
On a macroeconomic level, cash is king. Our current market cycle is headed towards or is already in the late period of a cycle. Many financial firms predict a high probability of a recession happening sometime early 2020. Just look at all the companies that have stockpiles of cash right now. Many profitable companies have taken notice of the current cycle and have stockpiles of cash.
Why is cash the king in a recession? Because it allows purchases of valuable assets (stocks, bonds, real estate, etc.) at low prices. The low prices exist because someone must sell their assets to pay for debts.
Yes, medical practices can be recession resistant. Trends show that people do not suddenly stop visiting their doctor because of a recession. On the other hand, most billing companies and its software companies are not. Public companies are tied to the stock market and its shareholders. Shareholders come first, resulting in cutting critical billing components to help its balance sheet.
You might say “Well my service, company or software is a private company.” Then the next question is, where is the money coming from? Is the company making its money off its client base (much like a practice is with its patients) or is it receiving funding from outside investors? Usually, if outside investors are involved, the company’s focus is to dress up it business narrative (market share by giving away services, profitability by cutting vital staff, etc.) to sell or take the company public. Who hasn’t seen an EHR, billing or software company sell or go public, then get bought out by yet another group?
What is the most labor-intensive and costly part of medical billing? It’s following up on Accounts Receivables (AR). As balance sheets are “adjusted” and cost saving measures are implemented, AR follow up will be the first to go. Other “adjustments” will be marketing efforts, quality of work force, customer service, and dropping of labor-intensive, lesser margin clients (i.e. Podiatrist).
If a recession hits, how would SMB do? During the 2008 recession, SMB had one of its biggest market share gains because SMB is directly tied to the success of its clients. As long as Podiatrists see patients and CMS/insurance companies pay their claims, SMB will be solvent. We are family owned and operated. You never have to worry about SMB being sold to another organization. As a result, during the last recession when companies were closing, cutting out departments, consolidating, dropping clients etc., SMB was there to help. Providing an asset to practices so they can thrive.
SMB helps practices thrive because of the 4 T’s:
- Trustworthy-You will know where you stand and get honest answers.
- Time-A treasured of assets, we get processes completed quickly and save valuable office time.
- Transparent-Completely open, you can always see what is going on in real time.
- Thoughtful-Every action preformed is with SMB’s Clients best interests in mind.
In weak or strong economic times, SMB Medical Billing’s focus is to maximize your practice’s reimbursements.
Thank you for your time.