Between the rising cost of business and an ever-changing insurance marketplace, healthcare systems are facing a number of challenges. One area of increasing headaches is how health groups handle unclaimed property compliance. As more states seek creative ways to raise revenue without increasing taxes, enforcement of unclaimed property laws is rising–and healthcare groups are a prime target. Let’s take a closer look at how unclaimed property impacts your bottom line and how we address it.
In general, unclaimed property refers to cash or credit balances held by a business and owed to a party that has not indicated awareness of them or an intent to collect them. When this property sits on the books for too long, the law states that the holding party must report and pay that balance to the state. The idea is that the state is the best-suited party to look after that property and ensure it reaches its proper owner.
Unfortunately, getting that money back from the state isn’t as easy as calling up the capitol and asking for a check. You have to file an order, prove ownership of that property and go through a number of additional checkpoints before you can recover that money. For most healthcare systems, it’s easier to avoid ever letting it get to that point.
Many causes of unclaimed property can be traced back to poor vendor management. Systems that don’t manage their vendor list with care are susceptible to duplicate payments, which can cause significant credit balances on vendors’ books. Other causes for credit balances include overpayments, reimbursements or incorrect billings.
For example, let’s say you are a health group and received a $500 invoice from Mercy Health in St. Louis. When your accounts payable department went to pay the invoice, however, a staff member submitted the payment to a Mercy Health you once worked within Cincinnati. Mercy Health in Cincinnati may credit that amount to your account, but there’s a good chance it sits on that account for years without anyone noticing. That’s money your healthcare is leaving on the table and not allocating toward more useful projects.
Our approach to managing unclaimed property starts by identifying pain points within your organization’s vendor management and proposing processes and procedures to mitigate them. Throughout our discovery review process, you can expect us to:
In our experience, many healthcare clients are under the false assumption that there is someone in accounts payable managing unclaimed property and following up as needed to recover any outstanding funds. However, we all know the stress and pressure those departments are under. With thousands of vendors on the books, it’s a real challenge to stop everything and deliver a thorough audit. That’s why they trust us to oversee the process and ensure invoices are being paid while identifying causes for the error.
Claiming your unclaimed property is only the start of what we can do for your healthcare system. Our comprehensive discovery review will analyze your entire accounts payable process and identify ways we can streamline your operations and increase your cash flow. Contact The Audit Group today and stop leaving money on the table.