What Is The Best Way To Calculate Insurance A/R Days?

Account receivables turn around time or A/R days (as it is commonly known as well) is the time an insurance claim takes from the moment the practice submits it, to the moment it gets paid. In other words, A/R turn around time is the indicator that measures how fast a health insurance company is paying you.

Recently, the topic of how to calculate this key indicator came up on SOAPM. Chip Hart – my Pediatric Practice Management AwesomeCast co-host – replied with his thoughts on this key metric.

It has been a while since Chip contributed to PediatricInc, so I reached out to him to ask if I could republish his reply to the inquiry made on SOAPM.

Chip answered that his insights are worth thousands of dollars… he also said something about consultants charge for this info, etc., etc. BUT, since he loves the PediatricInc readers so much and is grateful for all the praise and support we’ve given him over the years, he was willing to do an exclusive (*) PediatricInc only 100% discount. 🙂

(*) and by exclusive, I mean everybody that didn’t read the post on SOAPM

Continue reading for Chip’s nuggets of practice management wisdom.

Before I begin, we should remember that calculating “turn around time” or “A/R Days” or any of these similar measures requires making a lot of compromises and assumptions. None of the typically used benchmarks are really accurate, in my humble opinion, at least as far as what people think they actually mean. It can still be enlightening work, however.

OK. Thanks for heads up. So, how does one calculate insurance AR days?

Technically, the only way to truly calculate it is to measure the actual dates of each and every charge/payment pair and find the average.

How or where does one find the actual dates of each and every charge/payment?

Your PM ought to be able to generate that data, but even then there are some questions you should consider.

Like what?
  • Is the starting date the date of service or date of billing?
  • Is the ending date when the entire charge is paid off or just some portion
    of the insurance part? Or all of the insurance part?
  • How do you manage claims that are denied first?
  • How about claims that are partially paid?
  • How should you distinguish the patient portion of your balances?
  • Do you distinguish secondary claims?
  • If a claim isn’t paid off yet, exactly how do you count it?
Those are a lot of questions. Does you have to answer them all to calculate insurance AR Days?

If you want to approximate the time it takes you to collect (or, at least, the VALUE of what is uncollected put in terms of your charge rate), do this:

Screen Shot 2015-04-15 at 10.43.07 AM
What does the formula tell you exactly?

This [formula] would produce the “A/R Days” figure most commonly used by a consultant.

Can you offer an example with numbers?

For example, you might have $20,000 in A/R for BCBS and you routinely do $1,000 worth of charges every day for BCBS -> 20 A/R Days. The divisor is, simply, your total charges for Insco A during a time frame divided by the number of days in that time frame. Also note that for the divisor, you want an “average day” sample of AT LEAST 3 months. I prefer 3-6months.

Why is that?

I’ll spare you the math, but you really want a sample that’s a little larger than your expected value…if
you are in the 30-day range, as many of your readers should be, use a 60-90 day sample. There are inherent dangers to sample sizes that don’t reflect your present volume, so don’t use a year or a month (or less).

Seems straight forward. Anything else?

Having grown wary of this measurement, however, I looked for something similar that was more valuable.

Do share

The number I like to track is the relative A/R in the 60-90 days category.

How do you calculate this number?

This can be tracked in different ways, but if you want to compare payers, you can do it with two measures, in my opinion:

  1. How much of your A/R do your TOTAL 60-90 day balances represent?
  2. How much of your 60-90 A/R balances does Insco A represent?

…for 1, you might get a number like “18% of my A/R is in the 60-90 bucket.” Why is this important? Because anything >90 days is practically uncollectable (it happens, but you’re really looking at 10 cents on those dollars).

Of course we don’t want that number to grow, ever. Right?

If that number grows, you might be looking at a collections issue, a billing problem, etc. It’s a key figure,
in my opinion.

How about #2 (how much of your 60-90 AR balances does ins A represent?)

If BCBS suddenly goes from 25% of your 60-90 day A/R to 40%, something bad is probably happening or you wrote off/collected a lot of other money!

Note that you can’t really look at #2 in isolation. BCBS could maintain a steady chunk of your 60-90 A/R and you’d be fooled into thinking things are OK when the entire section is increasing as a result of your biller not doing the job (for example).

For those that don’t know, Chip also has his own blog. Make sure to visit: Confessions of a Pediatric Practice Management Consultant. Hurry over there before Chip decides to forgo keeping pediatric practices alive and independent for fame and fortune.

Also, if you haven’t already, consider signing up to receive an email alert when I post new content. That way you won’t miss valuable insights like the one you just read.

Deceptively Easy Way to Improve Your Practice, Guaranteed

On a piece of paper, write down this question:


It doesn’t have to be written exactly like I wrote it. Any variation will do. Then, make copies. Several of them. For the next few days or even weeks, hand each parent that comes to visit your office the sheet of paper with the question on it. While they wait, they will have plenty to think about out. You can ask them to use the remaining space – as well as the other side – if they require more than just a few lines.

I just saved you $5000 in consulting fees. Not to mention provided a way for you to have specific and practical ways  to make your pediatric office 10x more awesome than it already is.

You’re welcome…

The Reason Your Collection Letters Are Not Effective

Screen Shot 2013-11-14 at 10.53.56 AMMost patient collection letters I’ve seen come off very threatening and standoffish. They are written to intimidate. For example, they’ll say, “Final Notice” or “…your account will be sent to collections if you don’t respond...” The notion one is trying to convey is, you better pay now or else.

At our practice, we sent out letters with these aggressive words. And most of them got ignored. So what did we do? We sent another letter but this time, with stronger words like  2nd Notice or Final Notice… you know, to get them to shake in their boots.

Again, most of them were ignored. My guess is that at best, 1% of parents would respond to them. I think we offended more parents than those that sent payment.

Clearly, this was the wrong approach. Not to mention highly counterproductive. I wondered if there was a better way.

I thought about the reasons someone would disregard  2 or 3 statements (plus another 2 or 3 collection letters) from the doctor’s office? These 5 reasons came to mind:

  1. Genuine Oversight – This is the crowd that forgets, or procrastinates  or miss places our correspondence.
  2. Overwhelming Feeling – This is the group of people that have so many bills, thus so overwhelmed, that they take the out of sight, out of mind approach.
  3. Confusion – These are the parents that don’t understand their bills. So they set the statement aside with the hopes to call one day to find out what the deal is, but never calls. Out of site, out out mind creeps in until next billing cycle where the process starts again.
  4. Can’t pay the balance outright – Since this group can’t pay all their bills, they ignore the ones that aren’t on the priority list, like for example, cable TV.
  5. Disingenuous Oversight – These are the professional debtors. These are the people that never had intentions to pay. These are the people that intentionally disregard anything that they don’t want to pay.

If we slice up your A/R into 5 equal parts, and we trust that these are indeed the reasons parents haven’t paid, we’ll find that 80% of our patients aren’t deadbeats. Consequently, one is doing more harm than good when you consider that only the people that are in group 5 (or 20% of the people that owe you) are the deadbeats.

The 80% or more of your parents just need help.

The problem is, the stern letters are written under the premise that everybody that owes you is a deadbeat. Not to mention, people have a harder time paying people they don’t like. Sending them a nasty letter simply stirs the pot. At the very least it adds a bit of friction to the relationships between the practice and the parent.

And for those that the stern letter is truly intended for, they don’t really care. Nothing is going to motivate them.

How do we solve this problem?

With this in mind, I took a different approach in writing our patient collections. My focus is still wanting patients to pay their bills, but instead of threatening them with legal action, or telling them we are going to send them to collections, I wrote the letter with the intent of offering help.

Here is an excerpts that we use in our letters:

If you have a question regarding your bill or need help reading your insurance’s EOB, we’d be happy to help. We understand medical billing is not always simple to understand, but we can help. 

By lowering our guards a bit and reaching out rather than growing aggressive with every letter is simply  a better and more human approach. In other words, kindness is the approach.

The letter continues with this:

We understand that many of our patients experience financial difficulties. If this is the case, please let us know so we can assist you in making budget payment arrangements. 

The most stern part of the letter is written like this:

We want to help you fulfill your commitment without causing undue hardship, so please do not hesitate to contact our offices.

Lastly, we personalized each letter with the patient’s PCP. Most people really like their pediatrician. And the thought of sticking them with the bill may be enough to persuade the “good” debtors to give us a call.

Here is an example of the wording we use:

Your prompt attention is appreciated. Dr. « Insert_Patient_ProviderName» would appreciate it very much.

We found that our response went from 1% (at best) to around 25 to 30% by merely changing the tone of the letter.

It is worth noting, that the sooner one starts sending the letters, the better results you will have. If you wait 90 or 120 days before sending out the “friendly” collection letter, your chances of getting paid are less. The friendly letter, however, is very effective in the beginning stages of the collection process.

Before the day is over, take a look at your collection letters and see how you can come across as caring, compassionate and empathetic (which all pediatricians are) instead of the opposite. I’d be willing to bet someone else’s money that you will see better results.  

Do Your Patients Expect Something for Nothing?

iStock_000000385270SmallI would say yes.

However, I would submit that the reason our patient’s expect something for nothing is our fault, not theirs.

The truth is, we’ve given away so much over the years. And now that we want to charge for things (that have always cost us) like forms, after hour phone calls, and other things, people think we are now wanting to collect for things that they were lead to believe had no value.

Not to mention they often think we are nickle-and-diming them now.

But some practices have been very careful about not falling into this trap of giving away their time and their resources.

Take Village Pediatrics for example. Dr. Gruen and Dr. Gorman charge parents between $150 and $325 (depending on how many children) for a plan they call the added benefits plan. Here is what their website says about the plan:

This modest per-child administrative fee includes services that may be non-covered or non-reimbursed by your insurance company and are typically billed for at other medical offices. Such services include: e-prescribing, unlimited school/camp forms, as well as 24/7/365 access to the doctors without the use of a phone triage service. This fee has allowed Village Pediatrics to offer prompt and personalized care without dramatically increasing our practice volume, dropping insurance plans, or significantly raising our cash fees.

Why would parents pay above and beyond their health insurance premium every year to visit Village Peds?

Because Village Peds from the beginning decided to take a stance and tell parents, what they do has immense value. The time they spend with patients/parents in and out of the examining room is of great value. And if patient/parents want access to Dr. Gruen’s and Dr. Gorman’s valuable time and expertise, parents are going to have to pay for it.

I say, Good for them!! I applaud Dr. Gruen and Dr. Gorman’s efforts in establishing a practice that focuses on providing value worth paying for.

And my guess is that nearly 100% of Village Peds families pay the fee. Because all the other families that didn’t see the value, don’t have their children seen at Village Peds.

Here is the hurdle for me.

When I first read  the things Village Peds  offers  as a part of their added benefits plan, I said to myself, we can’t start charging like they do.  Why? Because all the things on that list our practice already provides without getting anything  for it.

Who’s fault is that? The patients/parents?

No. This is our mistake.

For those of us in the private health care world, we need to get over the fact that people are going to complain about paying for something they used to get for free. Heck, I don’t like to pay for something I used to get for free either. So we can’t hang that over our parents.

Furthermore, I’d emphasize that it is our responsibility to educate our parents that there is HUGE value in everything we do (both inside and outside the examining room).

If we don’t educate them, parents will continue to expect what they’ve always gotten. Which is something for nothing.

This is something I’m gonna start thinking about more. Especially if the plan is to remain an independent private practice.

Has Your Medical Practice Lost Its Empathy? Here Is How To Regain It


Empathy, of course, is an important part of what we do. Right? I mean, how else could we restore health, help children reach their full potential and cure them if it is not with some sort of empathy?

In my last post, I talked about how empathy was part of our practice’s core values but that from time to time, we forget to have it.

We start out with it, but we either get comfortable, annoyed, caught up in the day-to-day that we tend to forget why we do what we do in the first. place.

So how do we regain the empathy we once had?

Joanna, my better half, wanted to re-ignite our empathy at our practice. But she didn’t just want to preach it. She wanted something more practical that would resonate with our team members.

She gave each of our 10 employees (including the 2 other providers), a question to answer. Here is small sample of some of the questions.

  • Think about how you would feel if your child’s teacher calls you in because she want to talk to you about YOUR child without knowing what it is about. Describe to us what would go through your mind in the hours leading up to the meeting.
  • Think about the time you were up all night. Now think about how you felt the morning after. Did you feel good, ready to take on the world? Where you in a peppy mood? Or were you a little more irritated than usual, moody and with less patiences? Share with us your feelings.
  • Think about the time when close family member was waiting for potentially unpleasant news, like results on a biopsy or a MRI. Describe to us your feelings, your mood, your thoughts or what came to mind during the time you were waiting to get the news. How did you feel? What made the wait worse?
  • Think about the a time you were in a restaurant, and you sat at your table for more than a reasonable amount of time without the server coming over to check on you, take your order, give you the daily specials or acknowledge your presence in any kind of way. What goes through your mind when something like that happens? 

Each person was asked to respond to their own question and to give us their thoughts. Joanna didn’t let them off the hook easy. She probed and asked follow up questions in an effort to unpack each person’s feelings. All staff members expressed words like scared, anxious, nervous, apprehensive, uneasy, tired, moody, bored, and impatience, among many, many other adjectives.

Once we went around the room, Joanna started to make the connection. She emphasized that parents that come to see us are in similar situations as the one she asked them to respond to and as a result, have the same feelings the employees described. She also explained that in places where we are not comfortable, we tend to become more anxious, moody, nervous and sometimes angry.

Add to that insomnia or poor sleeping habits, and it is easy to see why people act the way they do. The problem is that our work environment doesn’t give us those types of feelings, thus we have to remind ourselves that for parents, our office is one of those unfamiliar, not-know-what-to-expect kind of places.

More often than not, as people that work day in and day out in a medical environment, we forget that for the parents we serve, our practice is a place of uncertainty. It is a place where we can potentially give bad news.

This is place where even a well-visist, which is supposed to be a good thing, can be an anxiety filled experience. And for parents, the fear of the unknown can be disarming.

And yes, moms (and dads) may not be on their best behavior when they arrive for their am appointment, but we should perhaps give her the benefit of the doubt and remember she was probably up all night and not in the peppiest of moods.

By the way, I’m not suggesting that we excuse foul language, insults, disrespect or anything along those lines. That type of behavior us unacceptable regardless of a parent’s state of mind.

Over the years, people have defined the word empathy differently. According to a Wikipedia article, the definition ranges from caring for other people and having a desire to help them, to experiencing emotions that match another person’s emotions, to knowing what the other person is thinking or feeling, to blurring the line between self and others.

Regardless of which definition you identify with, I think we should stive to find ways not to lose it. Joanna’s exercise  is just one example. For us, it worked. The exercise brought us back on point. For you, however, it might be something else.

That’s fine. But find it and keep it. Because sooner or later, empathy is going to be so rare, that patients will think it is a super power.

I’d love to hear what your thoughts are regarding this. Do you think that this is a worthwhile effort for your practice? Do you agree with me or disagree. If you do disagree, tell me why.

Three Tips For The Care and Feeding of New Parents

Our guest blogger today is Deb Deaulieu. If you read practice management trade publications, you may recognize her name. Deb is a Boston-area freelance writer and editor who covers physician practice management topics for the Massachusetts Medical Society and FiercePracticeManagement.

I love to give Deb guest post spots for several reasons.  For starters, she has been writing about practice management issue for about 10 years. So she knows the reality of our circumstances.  And the other reason I like love to give her the microphone, so to speak, is because she is a mom of two young children (I believe they are 18-months apart). 

Deb fits right smack in the middle of our core demographic. Thus her perspective is invaluable. Not only does she know our business from a practice management perspective, but she is also parent of young children. 

Now, many of us are parents of young children too. But our perspective is different because we are on the inside. 

In this post, she gives us some really interesting tips that we can do in our practices to help new families have a better experience. Enjoy!

Like a lot of otherwise well-adjusted adults who pass through your office doors, I was quite the handful as a first-time parent.

Now that my son is almost six, I can’t imagine calling the pediatrician’s office more than a few times a year. But in the beginning, it was at least weekly—even though, other than a serious case of gas accompanied by a foul mood, I had a perfectly healthy baby.

Nonetheless, when my son was about six months old, we ended up finding a new doctor with whom we’ve been happy ever since. Maybe that original doctor-parent pairing was never meant to be, but there are several ways that relationship might have been saved, or at least ended sooner:

A more structured prenatal interview.

I did what the books instructed, and scheduled time to meet with pediatricians while I was still pregnant.

The trouble, though, was that having never dealt with an actual newborn infant of my own before, I had no idea what questions I should ask. Most of my mind was still focused on the pregnancy and impending delivery.

With absolutely no framework for addressing what would come next, it wasn’t helpful for me to guide the interviews, which ended up being woefully generic. One of the areas that first doctor and I were less than compatible, for example, was that of medication and pain relief.

Had the practice used some type of standard form or questionnaire for expecting parents to fill out, the discussion likely would have been far more productive and possibly identified mismatches in attitude or expectations.

A virtual support system.

In 2007, there weren’t many physician practices I knew of that had Facebook pages or blogs. What I had, which became a lifeline and a cinderblock tied to my leg, were online message boards teeming with other over-tired, paranoid new parents.

A physician-authored blog such as Survivor Pediatrics would have been invaluable. If you don’t host a blog or post extensive parenting resources on your website, steer parents to trusted resources, such as healthychildren.org, that do.

If you host a Facebook page, you can keep the positives of message-board sharing intact by encouraging parents to post their own tips, provided you have the ability to moderate for nonsense or potentially harmful information (and reach out to parents who may need to adjust their remedies).

For instance, I discovered by accident that running the vacuum cleaner, or even a faucet if I was away from home, would calm my colicky baby almost instantly. Every day I could have gotten that information sooner may have very well added another to the end of my life.

A hub for community resources.

A lot of what I really needed during that stressful period truthfully wasn’t something the doctor’s office could provide at all.

I needed other moms to talk to, face-to-face, who were not relatives (family support is great, but as a source of advice can create a whole other kind of stress); public places I could take my child where screaming meltdowns, oceans of “spit-up,” and diaper blowouts were A-okay; someone to clean my house; a nap.

If you don’t do so already, create a bulletin board in your office posting details for children’s programs at local libraries; mothers’ groups; child-care resources; and relevant community activities.

Consider dedicating one corner of the board to any of these items that are also free or discounted to your patients—since budget is big driver keeping new moms isolated in their homes.

Again, you’ll have to exercise some oversight to make sure your board doesn’t become too advertorial; but a little time curating this information for your patients could alleviate a lot of the time you and your staff spend hand-holding new parents.

Finally, remember to cut new parents some slack, or at least not sigh audibly when the question list they pull out of their purse resembles a never-ending scarf cascading out of a magician’s sleeve. In six months to eighteen years, we’ll all return to our normally calm, rational selves.

Learn more about Deb’s work by visiting FiercePracticeManagement. You can also follow her via her new Facebook page.

Service Tips From a Parent

Today, we are going to takle a few customer service tips. But these tips are a little different because they come from a mom. That is right. These tips are from a mom of two that has had her share of visits to the pediatricians office.  Her name is Deb Beaulieu. And with this post, she gives us some ideas from a parent’s perspective, on how we can improve our service. By the way, we are not Deb’s pediatrician’s office. If it was ours, she wouldn’t have these complaints. 🙂


Now that it’s more common for physicians to blog and use social media, some of the posts I find most intriguing list the top items that pediatricians wish parents understood. Today I’d like to offer a twist on that format. As a healthcare writer and a parent, here’s my list of what I look for in a pediatrician’s office, presented as simple “do’s” and don’ts”:

DO train all staff members who are going to interact with my child to introduce him- or herself to the patient by name.

I realize that if you’re about to jab my four-year old with several needles, it might be preferable to make a quick, untraceable getaway. But a brief, “Hi, Bobby, my name is Donna, and I’m going to give you a couple vaccines today” will buy you more trust upfront and help the process go smoother, both in the office and after we get home. Trust me, by the time we get to the car, “Donna with the green lollipops” will be a rock star in my child’s memory.

DON’T speak to me, the parent, as though I’m a child.

As a mom, I understand the force of habit to speak in a sing-songy manner and describe cause and effect at a three-year-old’s comprehension level. But my husband doesn’t like it when I talk to him like this, and I don’t appreciate it when a doctor or teacher (possibly worse offenders) does it to me.

However, DO, by all means, assume my memory and/or ability to concentrate is diminished compared to a nonparent.

If I have a baby, I’m likely sleep-deprived and may not retain the information perfectly. If my child is fussy or I’ve got more than one with me, much of my attention is focused on keeping them quiet, ironically enough, so that I can listen to you. Avoid my confused phone calls later by providing written take-home instructions whenever possible. To all of your materials, consider adding a “what if” section. “What if” my child throws up some or all of this medication? “What if” he still hasn’t pooped by New Year’s? “What if” my mother-in-law insists that the remedies of her generation are worth a try? (And, yes, I will show her the document if necessary.)

DO educate with sensitivity.

I’ve talked to a lot of moms about this: The first several appointments with a new baby feel more like an examination of our parenting than our baby’s health. Flat head? Mom isn’t doing enough tummy time. Still not sleeping through the night? Our bedtime routine isn’t soothing enough. Eating poorly? We must be doing something wrong. Now, I absolutely don’t believe pediatricians really insinuate any wrongdoing at all when educating us about how to do things better. But in our sleep-deprived, want-to-be-the-greatest-mom-ever, slightly paranoid/obsessed state, we’re already our own harshest critics. You may need to try harder than you think to reassure new parents you’re a partner, not a judge.

Therefore, DO compliment us on at least one thing we’re doing right at every visit.

It doesn’t have to be anything major to give a big boost to our day.

That said, DON’T be afraid to share a laugh.

The day my pediatrician won me over completely was the checkup when I was describing that my newborn daughter had a bowel movement only every two to three days, resulting in a blowout reaching her armpits. When I went on to describe that every time, it looked as though she had fallen, clothes and all, into a bucket of poop-colored paint, the doctor laughed out loud, even snorted a little. Standing there in her stethoscope and white coat, she took a second to compose herself before explaining that her pattern would even out and/or my little girl would “grow into” her poops. I wasn’t there trying to make jokes, but express an honest (albeit detailed) concern. The doctor’s very human reaction at that time was just what I needed, and certainly helped create rapport.

DO help me out when I have my hands full.

With two children just 13 months apart, I find it especially irksome for anyone (anywhere) to comment on how full my hands are—without doing anything about it. The receptionist at my pediatrician’s office was the first person to have the forethought to hold a credit card slip still for me so I could sign it while juggling two toddlers and all the stuff that travels with them. The medical assistant has pushed the stroller for me, and other staff have held open doors. For this, they’ve earned my undying appreciation.

So, you see, it doesn’t have to cost a lot of time or money to create a loyal patient who will recommend you eagerly to all of her friends. When we’re trusting you with the health of the people who matter to us most, a little common sense and compassion in return go a very long way.

Deb Beaulieu is a Boston-area freelance writer and editor who covers physician practice management topics for the Massachusetts Medical Society and FiercePracticeManagement. Learn more about Deb’s work or contact her at www.debbeaulieu.blogspot.com.