An Overview

Cost to collect is an operational performance trending indicator many organizations use to track revenue cycle efficiency and productivity. According to the Healthcare Financial Management Association (HFMA) this traditional calculation looks at the total revenue cycle cost divided by the total cash collected.  This is a good indicator to track.

But the cost to collect ratio does not take into consideration the number of accounts resolved – only the dollars collected. Unlike the traditional cost to collect calculation, TRACost^SM:

• Captures the likely avoidable costs associated with collecting or resolving an account such as:
• Correcting inaccurate data
• Resolving flagged post-service edits
• Manually, instead of electronically, posting payments and adjustments
• Routinely following-up on third-party claims by calling payers instead of utilizing available automated methods and transactions
• Recouping denied claims for reasons related to pre-service and time of service process failures
• Management’s time to counsel employees and oversee rework 
• Takes into consideration that not all “revenue cycle costs” are related to resolving an account or collecting the expected payment amount.
• Includes expenses associated with resolving accounts and collecting expected payments that are often not identified in cost to collect calculation tools such as outpartner, collection agency, lockbox and bank fees, etc.

Among other key issues, by using TRACost^SM to calculate your total account resolution cost you will also gain essential insight into things like:

• Whether the high volume, low dollar accounts are being effectively addressed and resolved.
• Your financial screening effectiveness and how quickly you are identifying and adjusting accounts for patients who aren’t able to pay, or those who are able to pay but need to be referred to an agency, etc.
• The appropriate small balance write-off amount you should have in place, based on what it is actually costing you to resolve an account.

In addition to the valuable insight you will gain by identifying and benchmarking your total resolution account cost, G+A’s TRACost^SM will provide you with a method to:

• Assess departmental and organization-wide expense budgets and new or replacement employee requests. A few examples include:
  • Require operational leaders to submit with their annual operating budgets an analysis of how they will reduce the cost to resolve an account by reducing avoidable costs and capitalizing on the benefit of outpartner arrangements and supporting technologies such as:
    • Self pay account resolution outpartnering – including activities such as pre-registration and patient financial education and counseling
    • Insurance verification and propensity to pay software
    • Quality assurance software focused on denial avoidance
    • Software for concurrent editing of demographic and financial information entered at the point of scheduling/pre-registration and registration
  • Justify FTE requests by demonstrating how the additional or ongoing employee cost will be offset by the benefit of lower account resolution costs.
• Model the impact of various outpartner opportunities and technology enhancements. 
• Monitor the percentage of your salaries devoted to pre-service and time of service processes versus post-service rework and account resolution activities.
• Benchmark yourself against your previous results and track your progress as you reduce the cost to resolve an account. 

Please Contact us for more information!