What are you losing by not paying close attention to your accounts receivable? Jerry Godwin invites you to take a closer look. Photo credit: Dreamstime
A real-world look at how weak accounts receivable processes quietly erode profitability
By Jerry Godwin, MBA
July 16, 2026
Are you on autopilot when it comes to your accounts receivable (AR) management? There can be real consequences to coasting along without a real plan or paying attention with purpose to this important segment of the business.
In the first part of this series, we reviewed common symptoms of AR issues that many practice owners overlook, from strong production paired with weak collections to normalized denials to un-reviewed payments and aging reports that look fine on the surface but hide serious issues.
Then, the conversation continued when I walked through the end-to-end workflow and pinpointed exactly where breakdowns typically happen, from patient intake and insurance verification through exam documentation, coding, claim submission and payment reconciliation.
Now, let’s move from symptoms and workflow breakdowns to real-world impact. Take a closer look with a real optometry practice case study, examining a typical single-location optometry practice that believed its AR management was “good enough” until an independent analysis revealed the hidden costs of that mindset.
FACTS WE LEARNED IN OUR INITIAL AR ANALYSIS
Let’s look at Acme Optometry Center, a pseudonym for a client practice. This busy single-location, one-OD practice with six staff members had been operating under the common assumption that their billing processes were adequate. After all, patients were being seen, claims were going out and the practice felt busy. Yet their AR snapshot painted a more concerning picture:
- Insurance AR totaled over $120,000, with $62,000 (52%) sitting in the over-90-day category
- Patient balances added another $28,000 in aged AR
- In the previous 12 months, the practice had written off approximately $47,000 in contractual adjustments and denials
- Clearinghouse reports showed a 22% denial rate (significantly higher than the healthy benchmark of under 8%1)
- Consistent claims filing and documentation errors added up to over $12,000 in missing revenue in a recent quarter
These figures weren’t isolated. Ongoing processing issues, including claims stuck in draft status and unresolved ERA (electronic remittance advice) discrepancies, meant that earned revenue was consistently delayed or permanently lost. Claim coding issues were also responsible for incorrect insurance payments with the remaining balances written off.
Key Blind Spots Revealed
A deeper review uncovered three critical blind spots that had become accepted as normal operating procedure.
Blind Spot #1: Write-Offs Masking Denials
Rather than investigating and appealing denials, the team frequently adjusted them directly to write-off codes. Without a systematic feedback loop or deep understanding of payer contracts, these adjustments created artificially clean reports while allowing legitimate revenue to disappear quietly. Over 18 months, more than $19,000 in potentially recoverable denials had been written off.
Blind Spot #2: Unfiled or Under-Coded Claims
Some exams, diagnostic tests and materials were never submitted or were filed with incomplete coding or missing documentation. Claims lingered in “draft” status, and certain encounters lacked proper modifiers or medical necessity support. One recent quarter alone showed over $8,400 in services that had simply never been billed.
Blind Spot #3: Misapplied Payments and Unappealed Downcoding
Payments were often posted incorrectly, and instances of payer downcoding or improper bundling went unchallenged. The practice accepted reduced payments as final without systematic review or appeal. These issues accounted for an estimated $14,000 in lost revenue over the past year.
When we presented these findings, the owner’s first reaction was surprise. Their team was experienced and hardworking. How could so much be slipping through?
Why Process Matters More Than Blame
This is the critical insight: Good people operating in imperfect systems will inevitably create blind spots. In most optometry practices, billing responsibilities are added to already full workloads without standardized processes, regular training, or the proper tools for clearinghouse management and ERA interpretation. Instead of evaluating the total payment received, claims containing incorrect payments were mistakenly categorized as properly paid.
The solution lies in moving beyond “good enough” by implementing consistent processes, ongoing education, and accountability systems. When this practice cleaned up its existing AR and began applying more disciplined workflows (and eventually professional revenue cycle support), the results were dramatic. The over-90-day insurance AR dropped by more than 60% within six months, and cash flow became far more predictable.
It’s Time To Take Action
“Good enough” AR management carries a surprisingly high price tag. It rarely shows up obviously on monthly reports but steadily erodes profitability. When claims with payment errors are erroneously flagged as resolved without manual correction, it triggers improper financial write-offs. Consequently, incorrectly paid claims are mistakenly logged as valid payments.
The first and most important step is validation. An independent AR analysis can quickly reveal hidden leakage and provide clarity on your true financial picture. Many practices discover significant opportunities only after a third-party review.
Don’t let hidden costs become your new normal. The difference between “good enough” and truly optimized AR is often tens of thousands of dollars and much greater peace of mind.
In the final article of this series, I will share the practical “AR Power Stack” framework with specific, actionable steps and habits you can implement to create a reliable, consistent revenue engine in your practice.
References
Optometric Medical Solutions offers a free Revenue Health Quiz for an AR assessment and initial diagnostic of your current processes.
Read more on coding and billing here.
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Jerry Godwin, MBA, is president of OMS. With over 20 years of experience in healthcare, Godwin’s diverse background makes him an expert in business infrastructure development, practice management, revenue cycle management and education for medical eye care implementation. |
