Home health cash flow is lumpy. You do the visits, then you submit the claim, then you wait for payment. If your cycle is long or your payor mix is slow, you can be doing the work and still be short on cash. Here’s how to see it coming and what to do.
Where the gaps come from
Timing: RAP helps (you get a percentage upfront), but the bulk of payment comes after the final claim. If you’re slow to submit, payment slides. Payor mix: Medicare pays on a schedule; some MA and Medicaid plans pay in 30–45 days or more. If a big chunk of your volume is slow payers, your cash flow will lag. Volume growth: adding visits means more payroll and mileage before the revenue hits. If you’re growing fast, you need a cushion or a line of credit.
When to worry
If your aging over 60 days is growing every month, that’s a warning. If you’re dipping into a line of credit to make payroll and the balance isn’t coming down, that’s a warning. If you’re delaying vendor payments or stretching payables, that’s a sign. The fix isn’t usually “get more referrals”,it’s shorten the cycle (faster billing, follow up on denials) or adjust payor mix or growth rate so cash and expenses line up.
What to do about it
Forecast cash: next 4–8 weeks of expected receipts and expected payroll and bills. Update it weekly. If you see a shortfall, you have time to speed up collections, draw on a line, or slow growth. Build a reserve when you can; one bad month or one big contract delay shouldn’t put you in crisis. We have a cash flow checklist you can download: timing, payor mix, and a simple forecast template. For revenue-cycle lead indicators, see revenue cycle KPIs.