Cash flow management may not be the first topic that comes to mind when thinking about how to build a thriving ophthalmology practice. But the reality is that cash flow is just as important as the suite of services a business offers and the quality of the care it provides. With inefficient cash flow management, practices will struggle to meet financial obligations, like making payroll, in a timely manner. They may also find themselves having to spend more on outsourced services to help them manage their finances because they struggle to do it effectively on their own.
That’s why taking advantage of innovative financial technology, such as artificial intelligence (AI), is a powerful way to create value and set ophthalmology businesses apart. Even if backend revenue remains unchanged, optimizing cash flow can be a critical driver of business success.
What ophthalmology businesses can do to set themselves apart, however, is take advantage of innovative technology, including artificial intelligence (AI), to increase the efficiency of their cash flow management strategies — a move that creates value and drives business success on the backend, even if incoming revenue remains unchanged.
At Heaton Eye Associates, we've invested substantially in targeted deployment of AI and other technology to enhance our financial processes. Here's what we did and the lessons our experience offers to CFOs in the ophthalmology business.
OUR APPROACH TO CASH FLOW MANAGEMENT
Like most ophthalmology practices, we have particular priorities when it comes to managing cash flow. One is being able to manage the volume and complexity of receivables that flow through the business in order to predict incoming revenue accurately. Each of the thousands of appointments that happen in our clinics each month must be coded into a bill, then sent to patients and insurance providers. The bills are long and complex, because even a simple procedure can result in a page or more of codes.
Once we issue a bill, we need to track it to ensure that it's paid — and, depending on the status of the patient's deductible, payment will come either directly from the patient or from an insurance provider.
We also prioritize monitoring accounts payable so that we can compare incoming to outgoing funds and forecast our cash flow. We do this to ensure that we maintain a healthy level of liquidity as well as to calculate the quarterly dividends that we pay to our owners on a periodic basis.
To add an extra layer of complexity to cash flow management, our volume of business is not especially steady over the course of the year. Patients tend to book more appointments later in the year, when they've met their insurance deductibles and want to "spend" their insurance benefits before deductibles reset in January. For that reason, our finance team needs to be able to accommodate fluctuations not just in receivables, but also in payables (because we tend to have a higher volume of payables during busier periods, when our providers are ordering more equipment to support their patients).
Last but not least, we do all of this with a very small team. Heaton employs about 250 people but has only four employees in the finance office. Handling a high volume of complex payables and receivables without making mistakes requires our team to be extraordinarily efficient.
MODERNIZING OUR FINANCIAL TECHNOLOGY
Given these complexities, we have decided to modernize our stack of financial technology solutions. One key move was to invest in QuickBooks Enterprise to track processes and workflows systematically, as well as move finance data in and out of other business systems easily. With this technology in place, we can now easily do things like track revenue on a per-customer basis, a task that was challenging when customer data was siloed from finance data.
To add speed and efficiency to our processes, we've implemented Stampli, which helps us consolidate our invoicing onto a single platform and eliminate paper invoices entirely. Stampli leverages AI to capture invoices, code them and route them for approval, helping us to ensure that our invoicing is accurate and timely. In addition, its AI mitigates the risk of making duplicate payments for the same invoice, which could have a seriously detrimental impact on our cash flow forecasting and our ability to maintain liquidity.
We're also able to implement internal controls like matching invoices with packing slips so that we know we're paying the right invoice in response to the right bill. That's a particularly big deal when we're purchasing high-tech, high-priced eyecare equipment.
In short, Stampli helps us not just to work faster and more efficiently but also to achieve a dramatic reduction in our risk of invoicing errors. In turn, the solution helps us keep our cash flowing in the way we need to sustain ongoing business growth.
AI AND THE FUTURE OF OPHTHALMOLOGY INVOICING
In short, modernizing our finance technology stack, including adding AI to the mix, has helped us track cash flow and manage other financial processes with substantially greater efficiency, scalability and reliability.
Based on this experience, it seems a safe bet to me that AI-powered finance solutions are poised to play an increasingly important role in ophthalmology cash management going forward. By leveraging new technology, CFOs in this space can empower their teams to track receivables and payables more accurately, accommodate fluctuations in revenue and help sustain the long-term financial health of the business. OM
