Days Sales Outstanding and the Impact on Home Health Agencies

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days sales outstanding

A message from Michael Greenlee, HealthRev Partners Founder & CEO.

Days Sales Outstanding, or DSO, represents the number of days it takes a business to convert a sale into cash from the day the revenue is earned. Typically, businesses will have a DSO of 30 from the traditional billing notion of n/30, which means collections on invoices that occur on average in 30 days. Generally, health care businesses have an average of 45-60 days sales outstanding if they work with a payer to collect patient revenue.

Therefore, managing days sales outstanding is incredibly vital for businesses that have lean cash accounts, like home health agencies. An accounts receivable/cash greater than 100% can make it difficult to pay vendors and creditors on time. We’ve worked with hundreds of agencies that struggle with managing their aging A/R. They just don’t know where to start.

Here are four key steps to getting your arms around Days Sales Outstanding:

  1. Know where your current Days Sales Outstanding sits today and create a plan to lower that number within 90 days.
  2. Take a strong look at your operations from intake to claims submission. Make a list of the gaps found and rank them in order of importance.
  3. Create a task force of thought leaders and review your current policies, procedures, and workflows. Changing will require additional education and training.
  4. Track and monitor performance weekly. Make adjustments as needed to get the desired outcome.

We can help you better understand your DSO

If you need help calculating your days sales outstanding, use our DSO Impact Calculator or reach out to us today. Our consultative style of revenue cycle management for home health agencies ensures that you get key insights into your financial operations so you are better able to achieve success and drive investment across your agency. We offer a number of services including home health billing, home health coding, and home health billing recovery.

HealthRev Partners Can Help

We inspire possibilities for home health & hospice agencies through high quality, tech-driven revenue cycle management services. Our innovative, scalable solutions accelerate cash flow, spark continuous growth and reinvestment, and provide peace of mind, so you can focus on advancing your mission to provide exceptional care and touch more lives. If you’d like to talk about what we do, contact us today!

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