‘We can do better’: Practices leaving money on the table, 2023 RBMA Accounts Receivable Survey shows

The Radiology Business Management Association recently released its 2023 Accounts Receivable Survey, which shows practices may be leaving money on the table with their current approach to collections.

Researchers gathered 2022 data for the report earlier this year, incorporating key metrics such as days in accounts receivable, write-off percentages, bad debt recovery, and the cost of collecting bills.

A total of 112 respondents participated in the benchmark survey, revealing a median number of days in accounts receivable at nearly 31. About 16% of such debts were more than 120 days old, while average billing cost per procedure was over $3.

Radiology Business recently spoke (via email) with Kyle Tucker, a member of RBMA’s Data Committee, creator of the “True Cost of Billing” metric, and president and founder of Virginia-based Dexios Radiology Billing. He answered a few questions about the results.

RB: What are one or two of the biggest takeaways from this year’s findings? 

Tucker: The key takeaway is that money left uncollected is roughly 4x billing costs. Since billing costs and uncollected money are dollar-for-dollar and percent-for-percent equal, we are underspending and under-collecting in radiology. The RBMA added the True Cost of Billing metric to make this more evident to people. True Cost of Billing is billing costs plus uncollected money; both are expressed as a percent of collections. [TCB = Billing Costs% + (100% - Net Collection Percentage.] True Cost of Billing for the professional component in 2022 was 24.6%. Almost one-quarter of our practice expenses are billing costs if you factor in uncollected money. I believe TCB should be less than 10%. We can (and should) do better. 

RB: Any big changes from the previous survey’s findings?

Tucker: No, the survey has been fairly consistent as long as I have been following it (which goes back to the early 2000s).

RB: Are there any key passages from the document that you think warrant closer attention?

Tucker: I believe each practice should understand its “net collection percentage” and what is behind that number. We really need to understand how we are categorizing write-offs and adjustments. The RBMA has given us a good way to think about these in the new categories of adjustments, policy adjustments and write-offs. Once we understand these, I would be looking at a write-off report and backing into where we are losing money. Coupled with True Cost of Billing, we now have a “game” of “how do I spend our billing/coding resources to reduce the True Cost of Billing?” If we can conceptualize this, we will have outstanding billing.

RB: In RBMA’s announcement about the results, the association talks about how the data can be used to “build a better practice based on colleagues’ feedback.” Can you elaborate?

Tucker: We now know what our peers are doing with the three levels of the benchmarks: 25th, 50th and 75th percentile. I would want my results to exceed the 75th percentile in all important categories. Those categories which I would focus on are True Cost of Billing and net collection percentage. I also would look often at percentage of accounts receivable above 120 Days and credit balances. 

What exactly a practice should do is the hard part because each answer is so individualized. There are a ton of moving parts in billing, but I would start with my write-off categories and work backward on how you can fix them. Some will be easier than others, that is for sure. For example, are we getting a lot of denials for “not medically necessary” or “no authorization”? This is not an easy fix if we are a hospital-based group, but at least you can have a conversation with the hospital. Armed with some data, now you can show your hospital partner the economic impact of their mistakes. 

The bottom line is that is why you hire a good billing manager or revenue cycle management company to figure out the details of how to get your True Cost of Billing as low as possible.

RB: Overall, how is the industry performing with respect to accounts receivable?

Tucker: The report defines “normal” as the 50th percentile and the top quartile in the 75th percentile. To be brutally honest, even some of the 75th percentile numbers aren’t that great. I would shoot to be in the 75th percentile or better, across the board. 

RB: Anything else you’d like to add?

Tucker: The Chinese philosopher Laozi said: “The journey of a thousand miles begins with one step.” The key is to understand the numbers and then act on them.