June 23, 2025
Cash flow challenges are common in healthcare. This is true even for practices with steady revenue. Insurance payments can take weeks to arrive, and patient balances often take longer. Meanwhile, expenses like payroll, rent, and supply costs continue on schedule. In most cases, improving cash flow comes down to better coordination and small adjustments. That might include tightening billing workflows, reviewing patient collection procedures, or monitoring accounts receivable more closely. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
In a typical healthcare practice, payments do not arrive the day services are delivered. Claims are filed afterward, and the reimbursement process often takes several weeks. Some claims are delayed, others come back denied, and a few are only partially paid. On average, insurance payments take about 47 days to reach the provider. When patient balances are also behind schedule, managing regular expenses can become more challenging.
A few key metrics can help healthcare practices of all sizes. One of the most important financial metrics is days in accounts receivable, which shows how long it takes to collect after a visit. Another is the percentage of balances that are more than 90 days old. If this number starts to climb, it often points to a need for stronger follow-up. Denial rates are also important. A high rate can signal problems with eligibility checks or claim submissions, both of which affect how soon revenue positively affects cash flow.
While the delays are real, they can usually be managed with a few proactive steps. For instance, most practices can improve cash flow by making targeted changes to the systems and processes they already use. The following strategies are designed to help providers strengthen financial operations and create more predictable cash flow throughout the year.
Strengthen the Revenue Cycle — The revenue cycle includes every step from the time a patient schedules an appointment to the time the balance is paid in full. It covers insurance verification, claims, billing, and follow-up. Each part of the process has the potential to hold up payment or cause delays.
One place to focus is the front desk. Verifying insurance before the visit allows staff to check eligibility and share payment expectations. A consistent process at check-in, along with accurate balance information, makes it easier to collect copays and known amounts up front. This can reduce the need for follow-up and improve collection rates.
Submitting claims as soon as possible also helps speed up the payment process. If denials happen, a protocol for fixing and resubmitting can limit delays. Regular review of accounts receivable helps catch balances that are aging out. Over time, these reviews can help improve forecasting and highlight areas where process changes could lead to faster collections.
Improve Patient Collections — As more patients pay out-of-pocket for some portion of the care provided, practices are responsible for collecting a growing share of revenue directly from individuals. Many healthcare providers consider this a primary challenge.
To address this, practices can focus on clear communication, point-of-service collections, and digital payment options like patient portals or text-to-pay links. Providing training for staff members and updating billing workflows can lead to steadier cash flow and fewer carryover balances.
Integrate and Automate Systems — Many healthcare practices rely on multiple systems for scheduling, documentation, billing, and accounting. When those systems are not connected, staff may need to enter the same data more than once. This slows down processes and increases the chance of errors.
Integrated platforms reduce friction between departments and allow for faster information flow. Automating routine steps, such as eligibility checks, claims scrubbing, and payment posting, saves time and improves accuracy.
Visibility is another benefit. When real-time reports show denial rates, aging balances, or outstanding claims, managers can act more quickly. These insights support better decision-making and help prevent issues.
Manage Expenses and Overhead — Rising operating costs are affecting practice cash flow. In 2025, medical practices reported an average 11% increase in operating expenses compared to the prior year, with 90% citing higher costs year to date. That generally includes wages, rent, software subscriptions, and supply costs.
Reviewing both fixed and variable costs can help maintain healthy cash flow. Some practices are cross-training employees and reviewing schedules to help reduce overtime. Others are looking at vendor relationships to renegotiate or consolidate. On the supply side, inventory tracking and group purchasing may reduce waste and lower per-unit costs.
Monthly budget-to-actual comparisons is a simple way to analyze spending patterns. When reviewed consistently, this data can help identify seasonal fluctuations, spot early signs of overspending, and support better planning for upcoming expenses.
Forecast and Plan Ahead — Cash flow forecasting gives healthcare practices the ability to look ahead and anticipate financial needs. A basic 12-week rolling forecast provides a weekly snapshot of expected inflows and outflows.
This type of forecast includes expected insurance payments, patient balances, payroll, rent, utilities, and any planned purchases. Reviewing it weekly helps office managers stay ahead of potential problems and adjust spending if needed.
Some practices also keep a line of credit in place. Access to short-term financing can help bridge gaps during slow payment periods. Setting this up in advance, rather than in a moment of need, gives the practice more options.
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Improving cash flow starts with understanding the financial cycle, from scheduling and billing to collections and expense management. With consistent monitoring, healthcare practices can strengthen financial performance and remain focused on delivering care. If you have questions about the information outlined above or need assistance with outsourced accounting, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.