Inadequate Revenue Cycle Management and Billing Delays

Definition

Home health agencies face significant working capital challenges due to extended payment cycles: Medicare/Medicaid can take 30-60 days to pay claims, while private payers and MA plans often take 60-90 days or longer. Claims denials and recoupments create additional delays. Small agencies often lack dedicated revenue cycle management staff, leading to billing errors, missed deadlines, and delayed follow-up. The loss mechanism: if an agency bills $100K monthly but receives payment only 45-60 days later, it must finance 45-60 days of operations from other sources (cash reserves, lines of credit). With payroll due weekly, this creates cash flow stress. Outstanding A/R can represent 3-6 months of revenue ($715K-$1.43M for average agency), consuming working capital. Billing errors and denials (estimated 5-10% of claims) further delay realization of revenue. Late payments and accounts payable pressure accumulate.

Why This Matters

Revenue cycle management software, accounts receivable financing, payer relationship tools, billing automation platforms, collections services

Affected Stakeholders

Owner/Clinical Director

Related Business Risks