Receivables Force Change?

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Doctors are desperate for a solution to the long receivables from insurance carriers and health plans, which often extend past 180 days. This desperation forces doctors and others to search the horizon for alternatives to the way things are currently done. What can insurance carriers do to innovate and prevent being sidelined?

Insurance, Financial services and arranging finance
Innovation Development
Healthcare Information Technology
Joe Helmick (BS, MSBA, CSM)
68 months ago

3 answers

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We are seeing 90+ day receivables cycles on consulting engagements with some FMCGs. It is tremendously burdensome to small businesses, in particular.

Unfortunately, this is a power play. Bigger entities are doing this because they feel they can.

Ultimately, it erodes the relationships and any loyalty or goodwill. It also will cause the smaller player to move their business elsewhere, if they have a choice (sometimes one can't do this...sounds like this is the case with insurance carriers).



Michael Fruhling
68 months ago
Why would the insurance company want to do anything?> - Dr. David E. 62 months ago
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I often recommend looking at other industries for norms. It’s ugly on a lot of fronts. Oil and gas extraction, technical and trade schools, and automotive equipment rental are other industries with average accounts receivable periods of more than 100 days. When compared to private companies average of just 39 days. Private company accounts receivable days have remained fairly consistent over the past five years, averaging between 35 and 40 days.

Telephone companies and those in the travel and leisure industries have the shortest cash-to- cash cycle times. One could learn a lot by investigating their practices and processes.

Joshua Rand
68 months ago
MC/MD have up to two years to pay ARs. - Dr. David E. 62 months ago
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Joe, this is a really interesting problem, because it ultimately comes down to the issue of whether insurers are willing to make payments more quickly. They probably aren't, because given the vast sums involved, there are opportunity cost issues to solve on their end. Individual doctors lack the market power to force the change on their own.

Copying the practices of other industries won't work unless you also copy the background circumstances of those industries. In Travel & Tourism, they are not dealing with life-and-death issues, consumers have market power, and there are many vendors to choose from. In a regulated or quasi-monopoly industry like Healthcare, that is not the case.

One thing to look at in a large regulated bureaucracy is to see which processes are actually necessary by regulation and which are carried on by "tradition". Some of that can be solved by automation, but a good old fashioned workflow chart on a whiteboard can work wonders.

If you had a magic wand and could create an entirely new system while still protecting the interests of all parties, what would you do?

David Klahr
68 months ago
Go back to the private pay healthcare system after WW-II - Dr. David E. 62 months ago

Have some input?