Over the past few years, accounts receivable departments have faced a series of unprecedented challenges. From the remote work brought about due to the COVID-19 pandemic to the precarious nature of navigating through a potential recession, finance departments have been forced to adapt rapidly.
This is particularly true in the healthcare staffing industry. The pandemic increased the demand for nurses, but economic uncertainty frequently affected the ability of hospitals to make payments. Stephen Tracy, Director of Finance at CHG Healthcare, has first-hand experience in managing this delicate process. He sat down to speak with us about the best practices and solutions he used to ensure that CHG continued to thrive, despite external factors.
“A key focus for us was to adopt a flexible approach to receivables management. One that allowed us to be a little more granular during the tight times, but able to shift to a larger scale and scope during times of plenty,” Tracy said.
Having a robust reporting system was vital to this effort. During economic prosperity, the company used its data to forecast growth and managed AR strategically to realize this goal. Stephen knew that his team could afford to be more lenient in extending credit, as this would expand their client base, while the likelihood of clients defaulting on payments was low.
“Because we supplement healthcare providers for hospitals, it means that the people we provide are not always needed,” Tracy said. “Or sometimes they are needed because the hospital or office is in a bad way financially and they've lost staffing and need us to help supplement that. But that's a risky business because they could go into bankruptcy. So, when things are going really well, we're more focused on things like, can we predict bankruptcy better? Can we afford to do less risky business? Do we have to work with everyone, or can we be more choosy?”
"When things are going well, we're more focused on things like, can we predict bankruptcy better?"
Stephen Tracy, Director of Finance, CHG Healthcare
Quadient AR facilitates this through its machine learning and AI, which assesses factors like past payment behavior, providing a letter grade to indicate the likelihood of timely payments in the future. This predictive analysis also comes into play during times of economic downturn.
“When times are tight, we're focused on the details,” Tracy said. “We look at things like the probability of payment. Have our low-touch clients slowed down their payments? Do we need to elevate them to medium or high touch to make sure they pay on time?”
The software also helps them by analyzing individual invoices and estimating what bucket the invoice is likely to land in, from 1-30 days, 31-60 days, 61-90 days, and 90+ days overdue.
After determining which accounts are likely to need extra attention, Tracy states that his AR team then strategically sets out the best communication plan for them. This means identifying the most effective approach to engage specific clients, be that via email or over the phone. It also means establishing the ideal communication cadence for each client, as well as the messaging to use with them.
“Sometimes we have to remind hospitals that we are essentially an extension of their payroll and we need to be treated that way,” Tracy said.
Stephen found that Quadient AR offered a simple solution to this challenge through its custom receivables workflows. These include customized communications tailored to a client’s need, as well as things like escalations that ensure the appropriate decision-maker is targeted at the right moment.
“Sometimes we have to remind hospitals that we are essentially an extension of their payroll."
Stephen Tracy, Director of Finance, CHG Healthcare
“It’s a difficult balance because it’s not good business to provide staff to a group that can’t pay its bills, but you need those people to provide health care for a community,” Tracy said. “So we have to have some difficult conversations that help them understand the importance of what we do for their business and community. This means we try to work with them, asking things like, What can you pay? What can you do for us? How can we become a priority for you? What we're always trying to achieve is to do right by our people and our community. We try to find a happy medium there.”
Quadient AR’s ability to personalize communications and target specific positions within a company allows organizations to do just that. Keeping the importance of an invoice top of mind while working with the client to ensure a resolution that is mutually beneficial to both parties. The software further delivers this through its customer self-service portal, which provides clients with the ability to make payments at any time from anywhere, view upcoming and past due invoices, ask questions, and raise disputes, empowering them with greater control over their accounts.
Because of the various external factors that can significantly impact the flow of business, Tracy found it necessary to look for AR solutions that have the ability to change rapidly, according to need.
“With a lot of tech out there, it seems like the bigger the company, the less customer service there is,” Tracy said. “And then, if you needed anything changed for things like reporting, it probably isn’t going to happen. You have to work within it, and if you can’t then you have to go to an outside third party or something similar. We needed software that could ebb and flow with changes in the economy. We needed that flexibility without having to talk to 200 different people to get a simple answer, or paying $2000 an hour for a consultant to build our reporting for us.”
“With a lot of tech out there, it seems like the bigger the company, the less customer service there is"
Stephen Tracy, Director of Finance, CHG Healthcare
Tracy states that Quadient AR has offered the flexibility that the organization needs for optimal performance, whether the economy is booming or not.
“It’s a robust platform,” Tracy said. “We can grow and shrink and the tech can keep up with what we need to do. Just as importantly, the care that they put into customers, like us, has made them really feel like a part of the CHG family.”
“The care that (YayPay) put into customers, like us, has made them really feel like part of the CHG family"
Stephen Tracy, Director of Finance, CHG Healthcare
To learn more about best practices that can help AR departments thrive, even during difficult economic times, watch our on-demand webinar, 5 Collections Strategies to Minimize Risk during Turbulent Times.