Effective Strategies for Managing Patient Accounts Receivable in Healthcare

Managing patient accounts receivable (AR) in healthcare is one of the biggest financial challenges for medical practices. Without a solid system, unpaid balances pile up, cash flow slows, and your practice takes a hit. The good news? A proactive AR strategy—clear policies, automated reminders, and upfront collections—can prevent revenue loss. Let’s dive into the most effective strategies to keep your patient AR under control.

Key Takeaways

Monitor AR consistently – Run weekly reports to track unpaid balances.
Train front desk staff – Collect co-pays and outstanding balances at check-in.
Use patient portals – Enable online payments and automated reminders.
Offer flexible payment options – Short-term plans reduce overdue balances.
Act fast on overdue accounts – The longer you wait, the harder it is to collect.
Set clear policies – Patients should know their financial responsibilities upfront.
Avoid weak payment language – Replace “Would you like to pay?” with “How would you like to pay today?”
Consider late fees carefully – They can encourage payments but may deter some patients.
Use collection agencies as a last resort – Only after 90-120 days past due.
Be consistent – A firm, proactive approach reduces unpaid balances long-term.

Why Monitoring Patient AR is Critical for Your Practice’s Financial Health

Many healthcare providers focus on setting up their practice—getting the right equipment, hiring staff, implementing software—but they often delay setting up a solid collections process. They assume patient collections aren’t a priority until the money starts rolling in. However, this mindset can be a financial disaster waiting to happen.

Without clear policies and staff training, collecting payments—whether for co-pays, self-pay patients, or deductibles—can quickly spiral out of control. The key? Have a plan in place from day one.

Establishing clear policies and procedures is key to successful AR management.”
👉 Read more on setting up policies and procedures in your medical practice.

Deductible Season: Why This Time of Year is Crucial for Patient Collections

We’re in full deductible season—that time of year when most insurance deductibles reset. Translation? Many patients are suddenly responsible for large portions of their medical bills before insurance kicks in.

Here’s why this matters:

More patients are responsible for payments. Until their deductible is met, they owe the full cost of services.
Your practice depends on these payments. Without them, your cash flow slows down, and financial stress mounts.
If you’re a new practice, this is even more challenging. You’re already juggling startup costs—now you’re also relying on patients (instead of insurance) to pay you on time.

The best way to avoid a financial crisis? Monitor patient balances from day one. Waiting until accounts are 60, 90, or even 120 days past due will only make things harder to collect.

How to Get Patients to Pay Their Balances on Time

Effective strategies for managing patient accounts receivable in healthcare start at the front desk. Your staff should be trained to:

Collect co-pays and balances at check-in. Don’t wait until after the appointment!
Remind patients about their outstanding balances. Every phone call or visit is an opportunity.
Offer payment plans. Short-term plans can make it easier for patients to pay, ensuring you still get revenue.
Encourage the use of Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs). Many patients forget they have these funds available.

What you should avoid? Asking, “Would you like to pay today?” Instead, say: “How would you like to take care of your balance today?”—a subtle but powerful shift that encourages payment.

The Importance of an Internal Collections Process

Before you even consider sending unpaid balances to a third-party collection agency, you need a solid internal collections process in place. Many practices make the mistake of waiting too long to act, assuming patients will pay eventually. Unfortunately, the longer an account sits unpaid, the less likely you are to collect.

Here’s what happens when patient balances age:

AR Aging Bucket	Likelihood of Collection
0-30 days	90%
31-60 days	75%
61-90 days	50%
91-120 days	25%
120+ days	Less than 10%

Moral of the story? Act fast. The moment a balance becomes patient responsibility, your staff should be following up immediately—not months down the road when collecting becomes nearly impossible.

How to Monitor Patient AR Like a Pro

If you don’t have a system for tracking and managing patient AR, you’re essentially flying blind. You need regular reporting to keep tabs on unpaid balances, recognize trends, and identify problem areas before they get out of control.

✅ Run AR reports weekly or biweekly. Most billing systems allow you to pull aging reports, showing how much money is sitting in each AR bucket (0-30 days, 31-60 days, etc.).

✅ Compare insurance AR vs. patient AR. Just because claims are getting processed doesn’t mean the money is coming in. Track both to ensure your revenue is balanced.

✅ Set collection targets. If patient balances are growing too fast, implement stricter payment policies at the front desk.

✅ Track front desk collection performance. Are your front desk staff consistently collecting co-pays and balances? If not, it’s time for more training.

By staying on top of these reports, you’ll have real-time visibility into your practice’s financial health—rather than scrambling to fix cash flow issues after it’s too late.

How Patient Portals Can Boost AR Collection Efforts

Patient portals aren’t just for medical records—they’re a game changer for billing and collections too. A well-integrated portal should allow patients to:

💻 View their outstanding balances 24/7
💳 Make payments online (without needing to call your office)
🔄 Set up auto-pay or payment plans
📲 Receive email or text reminders when payments are due

Not only does this increase convenience for patients, but it also reduces administrative burden on your staff. Instead of spending hours chasing down payments, you can automate the process—freeing up time for more pressing tasks.

Patient portals make it easier for patients to view balances and make payments online.”
👉 Learn how patient portals streamline billing and AR collections.

Why Consistency is Key in Patient Collections

The secret to effective strategies for managing patient accounts receivable in healthcare is consistency. Patients are far more likely to pay when they know:

Your financial policy is firm and non-negotiable
Staff will always ask for payments upfront
Late payments have consequences (e.g., late fees, collections, appointment restrictions)

If you’re inconsistent, patients will take advantage. They’ll assume “Oh, they didn’t ask me to pay last time—I’ll just wait.” And that’s exactly how your AR starts spiraling out of control.

Make patient collections a habit, not an afterthought. Train your staff, reinforce policies, and be proactive—not reactive—about getting paid.

How to Handle Patients Who Refuse to Pay

No matter how well you manage your patient accounts receivable, you’ll inevitably encounter patients who just won’t pay. Some genuinely can’t afford it, while others simply ignore their bills. So, how do you handle these situations without damaging patient relationships—or your revenue?

1️⃣ Have a Clear Financial Policy – Patients should know upfront what they’re responsible for. Require them to sign an agreement that outlines co-pays, deductibles, and payment expectations.

2️⃣ Offer Payment Plans – For patients struggling financially, short-term payment plans (30, 60, or 90 days) can make it easier for them to pay while ensuring you still collect revenue.

3️⃣ Use a Pre-Authorized Payment Agreement – If your system allows, store a patient’s credit card on file (with their consent) so you can automatically charge them when a balance is due. This eliminates the excuse of “I forgot to pay.”

4️⃣ Implement a No-Pay, No-Service Policy (If Legal in Your State) – If a patient has an outstanding balance, you can require payment before scheduling future appointments. Just ensure this aligns with your state laws and ethical guidelines.

5️⃣ Send Past-Due Notices & Make Collection Calls – The moment a balance hits 30 days overdue, your team should be calling, emailing, or texting the patient to remind them. The longer you wait, the harder it is to collect.

6️⃣ Use a Collection Agency as a Last Resort – If a balance hits 90-120 days and all other efforts fail, it may be time to send the account to a third-party collection agency. Just be aware that collection agencies typically take 30-50% of the recovered amount.

Should You Charge Late Fees for Unpaid Patient Balances?

Late fees can be an effective strategy for managing patient accounts receivable in healthcare, but they’re not always the best choice.

Pros of Charging Late Fees:
✅ Encourages timely payments
✅ Compensates your practice for the cost of chasing down payments
✅ Makes patients take their financial responsibility more seriously

Cons of Charging Late Fees:
❌ Can create negative patient experiences
❌ Some states have restrictions on healthcare late fees
❌ Might drive patients to competitors who don’t charge fees

If you decide to implement late fees, make sure:

Your financial policy clearly states the fee structure
Patients are aware before they receive their first bill
The fee is reasonable (e.g., 1.5% per month or a flat $10-$25 fee)

When to Write Off Patient Balances

No one wants to write off patient debt, but sometimes, it’s necessary. Writing off balances should be a last resort, used only when:

✔️ The patient is deceased with no estate
✔️ The balance is too small to justify collection costs
✔️ The patient has proven financial hardship
✔️ All collection efforts have been exhausted

That said, don’t let write-offs become a habit. If you’re writing off too many balances, it’s a sign that your patient AR management process needs improvement.

FAQs: Effective Strategies for Managing Patient Accounts Receivable in Healthcare

What is patient accounts receivable (AR) in healthcare?

Patient accounts receivable (AR) refers to the money owed to a healthcare practice by patients for services rendered. This includes co-pays, deductibles, and balances after insurance payments. Monitoring AR is crucial for maintaining cash flow and ensuring the financial stability of the practice.

Why is monitoring patient AR so important?

Monitoring patient AR helps prevent revenue loss by ensuring that outstanding balances are collected on time. Without proper tracking, unpaid bills can accumulate, making it harder to recover payments. Regular AR monitoring improves cash flow, reduces financial strain, and keeps the practice financially healthy.

How often should I run patient AR reports?

It’s best to run AR reports weekly or biweekly to track outstanding balances. Regular reporting helps identify trends, spot overdue accounts, and take action before balances become uncollectible. Keeping close tabs on AR ensures timely follow-ups and minimizes long-term financial losses.

What are the best ways to collect payments from patients?

The best strategies include collecting co-pays upfront, offering payment plans, using patient portals for online payments, and sending automated reminders via email or text. Ensuring front desk staff consistently ask for payments at check-in also helps reduce overdue balances.

How can patient portals help with AR management?

Patient portals allow patients to view their balances, make payments online, and set up payment plans. They also enable automated billing reminders, reducing the administrative burden on staff. By making it easy for patients to pay, portals improve AR collection rates and overall financial efficiency.

Should my practice charge late fees for unpaid balances?

Charging late fees can encourage timely payments, but it’s important to check state laws and clearly outline these fees in your financial policy. A reasonable late fee (e.g., 1.5% per month or a $10-$25 flat fee) can help reduce overdue balances while maintaining patient relationships.

What should I do if a patient refuses to pay their balance?

Start with reminder calls, emails, or texts. Offer payment plans or suggest using Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs). If they still don’t pay, consider implementing a pre-authorized payment agreement or, as a last resort, sending the account to collections.

When should a practice send an account to collections?

If an account is 90-120 days overdue and the patient hasn’t responded to reminders or payment options, it may be time to send it to a third-party collection agency. However, this should be a last resort, as agencies typically take 30-50% of the collected amount.

Is it okay to refuse service to patients with unpaid balances?

In many cases, yes—practices can require patients to pay past-due balances before scheduling new appointments. However, emergency services and certain legal restrictions may apply depending on your location. Always review state laws and ethical guidelines before enforcing this policy.

What’s the best way to prevent high patient AR balances?

The key is proactive collection. Train staff to collect payments upfront, regularly monitor AR reports, offer online payment options, and use automated reminders. Establishing a clear financial policy and ensuring patient payment expectations are communicated early can also significantly reduce unpaid balances.

Final Thoughts on Managing Patient Accounts Receivable in Healthcare

Mastering patient accounts receivable (AR) management isn’t just about keeping track of numbers—it’s about ensuring the financial health of your practice while maintaining strong patient relationships. If you’re not actively monitoring and collecting patient balances, you’re leaving money on the table and setting yourself up for cash flow issues.

The key is consistency. From the moment a patient schedules an appointment, they should understand their financial responsibility. Upfront collections, clear policies, and proactive follow-ups will significantly reduce outstanding balances and make your revenue cycle smoother.

If you’re struggling with patient AR, start making changes today. Implement a solid internal collections process, train your staff, offer payment plans, and use automation tools like patient portals. The sooner you take control, the stronger your financial future will be.

Got a strategy that works well in your practice? Drop a comment and share your best tips!