Texas Tech University Health Sciences Center
The Revenue Cycle: Accounts Receivable

The Revenue Cycle: Accounts Receivable

While it varies from day-to-day, Texas Tech Physicians has approximately $25 million in accounts receivable. This represents money that we are owed by insurance companies or individuals for professional services that we provide. This is stated in terms of charges and we discount the full amount owed to comply with contracted terms we have with insurance companies and governmental programs.

It's a big responsibility to attempt to collect that much money and there numerous hurdles in our path. In general, I think we do a respectable job of collecting money as we compared to other practices in our peer-group. However, there's always opportunity for improvement in every aspect of the revenue cycle.

Regarding debtors, those who owe us money, I came across an article recently published by a company called TSI. The article points out that patients with an outstanding balance have different reasons for why they haven't paid and they should not all be treated the exact same way. TSI has many years of experience in patient collections and, in their classification system, there are four distinctive types of debtors. See if this makes sense to you:

Type                                          Why They Pay

Reliable                                     Statement

Distracted                                 Reminders

Disrespectful                           Third Party Impact of Soft


Professional Debtors             Intensive Professional Collections

To further elaborate, reliable payers are those that pay on the first statement within 30 days. Distracted payers have good intentions of paying their bills, but they are busy and distracted and don't always pay on time. Reminders are usually sufficient to get their balances resolved. Disrespectful debtors believe they should have the right to decide what
the creditor deserves to be paid. They won't respond to internal first party bills, calls and letters but often respond to a third party collector once they realize the consequences of not paying their bills. Professional debtors are likely in collections already with other creditors because that is how they conduct their business. Sadly, some never had any intention of paying for services from the moment they walked in the door.

We always want to mix the need to collect with compassion. I have written in this space about patients with high deductible plans who haven't paid due to financial reasons and may need more time and/or a payment plan. We are pleased to work with these folks.

Others have the funds, but don't understand their bill or insurance policy and want to make sure the bill is correct before they pay it but can't find the time to call the billing office. Others want to renegotiate pricing after services have been provided. They may look at their explanation of benefits, see what their insurance paid and feel that the physician was already sufficiently compensated for the amount of time they spent with the patient, regardless of whether they can afford their portion or not.

So, it is interesting and certainly never dull. We are motivated to do this because we believe in the mission of our institution and we know that funds collected are the economic engine to keep things purring along.