What does "accounts receivable" mean in a medical practice?

The term "accounts receivable" in a medical practice refers to the payments that are due but have not yet been collected from patients or insurers. This encompasses any outstanding balances that the practice expects to receive for services already rendered. When a medical office provides care to a patient, it may submit claims to insurance companies or wait for the patient to pay their portion; thus, these amounts owed are tracked as accounts receivable.

This concept is crucial for managing the financial health of the practice, as it reflects cash flow and the effectiveness of billing procedures. Understanding accounts receivable helps in assessing how quickly and efficiently payments are collected, which is vital for maintaining operational stability and planning for future expenses.