For those new to the term days sales outstanding (DSO), it's a measure of the average number of days that it takes a company to collect payment after a sale has been made. In the case of our topic, how long it takes a hospital to receive payments from patients or their insurance companies. Now that we got that out of the way, let's dive in!
Timing and efficiency is crucial in maintaining DSO. That's why clinical documentation is so important. It not only grants insight into time-to-bill and confirmed billing, but also helps to eliminate the use of clunky hospital portals and medical record requests. This more efficient and streamlined process helps billing companies reduce chart lag and improve and maintain DSO at the same time.
Improving DSO is a long-term commitment. As they say, nothing great happens overnight. A fix to this problem is committing to letting your data work for you. Through workflow customization and validation of CPT levels, account numbers, and date-of-service, the leg work for billing companies is drastically reduced. Reducing DSO requires changes to inefficient habits as much as it does to administrative processes and procedures. We like to call this Charge Review.
Visibility into current processes can't be overstated. Any concerted effort to reduce DSO must begin with data on current statuses. Once data can be collected, bench marking analysis that shows how that level compares to peers and competitors can help track improvement or drop-off. From there, you can make any adjustments as needed.
A critical aspect of reducing days sales outstanding (DSO) lies in monitoring and evaluating the effectiveness of initiatives aimed at improving billing processes. Without proper visibility into current workflows and performance metrics, it becomes challenging to identify areas for optimization and gauge the success of implemented changes. Therefore, establishing robust monitoring mechanisms is essential for tracking progress and making data-driven decisions to further enhance DSO reduction efforts.
One effective approach to monitoring DSO initiatives is to implement comprehensive reporting and analytics systems. By leveraging data analytics tools, billing companies can gain valuable insights into key performance indicators related to revenue cycle management, such as billing turnaround times, claims denial rates, and collection efficiency. These insights enable proactive identification of bottlenecks or inefficiencies in the billing process, allowing for timely interventions to address underlying issues and accelerate cash flow.
Furthermore, continuous benchmarking analysis plays a crucial role in assessing the effectiveness of DSO reduction strategies over time. By comparing DSO metrics against industry benchmarks and competitors' performance, billing companies can gain a broader perspective on their relative standing and identify best practices to emulate or areas for further improvement. This ongoing benchmarking process facilitates continuous learning and optimization, ensuring that DSO reduction efforts remain aligned with industry standards and evolving market dynamics. Ultimately, by prioritizing visibility, data-driven decision-making, and benchmarking analysis, billing companies can sustainably improve DSO performance and enhance financial health in the long term.