Why Is Healthcare Revenue Cycle Management Important?

Revenue Cycle Management is Integral to Healthcare Today

In addition to providing the highest quality of care, a successful revenue cycle management (RCM) process is essential to an organization’s fiscal health. Hospitals and health systems need to be acutely aware of how it works, ways to improve it and how to tackle common challenges in a rapidly evolving environment marked by increasing demands. A healthy and successful healthcare RCM process helps ensure timely revenue, steady collections, and financial viability for organizations, making it possible to focus on delivering quality care to patients.

RCM is unique to each organization and its ability to manage medical billing and revenue effectively. Still, from 100-bed hospitals to large health systems, the bottom line is the same for all: increase revenue and reduce debt and expenses. These fundamental elements require alignment from both the patient’s healthcare team and an organization’s administrative team. Today’s patient is seeking an experience that is seamless and integrated from the moment they schedule an appointment or walk into a hospital or practice, to the moment they receive their bill. This requires teams to work in lockstep to ensure the most efficient RCM process possible. Whether it’s charge capture, claim submission, coding, patient collections, registration, remittance processing, third-party follow-up or utilization review, each step impacts the speed at which revenue is recognized and the organization’s overall fiscal health.

The Benefits of a Successful RCM Process

A strategic approach to RCM provides hospitals and health systems with numerous benefits. Conversely, poor management and billing practices can result in financial losses for the organization and even impact its ability to remain in business. As America’s healthcare system moves toward value-based reimbursement, streamlining operational procedures can help an organization remain financially viable and focused on providing a superior patient experience. Benefits of an effective RCM process to hospitals and health systems can include:

• Reduced time commitment. RCM helps organizations save time by streamlining processes, from patient pre-registration and registration to appointment and payment reminders to engaging payors regarding claims and denials.
• Reduced errors and redundancy. RCM can assist hospitals and health systems in the timely detection of errors, allowing them to be quickly corrected.
• Reduced costs. With a reduced time commitment and a lower likelihood of errors, organizations can reduce the costs associated with managing their revenue.
• Fewer denials. By reducing or eliminating errors in payment claims, RCM can also lower the denial rate, expediting payments to the organization.
• Reduced administrative burden and faster collection process. Effective RCM can help expedite the collection process, reducing the administrative burden around preparing bills, submitting claims and collecting payments.
• Improved patient experience. Ultimately, the goal of RCM is to simplify and streamline the revenue process and allow hospitals and health systems to focus more on delivering quality care and an optimal end-to-end patient experience.

Ways to Improve RCM

Hospitals and health systems can significantly improve their revenue collections through effective RCM. Improving and streamlining these core operational procedures emphasizes patient care as an organization’s primary responsibility while ensuring it remains financially viable. The key to continually improving the process is rooted in setting attainable benchmarks and regularly measuring results. This allows the organization to identify key learnings and best practices over time and areas that may require correction.

An important step in improving RCM is investing in a knowledgeable administrative staff that understands revenue management's intricacies, including the coding and processing of claims. When possible, automating aspects of the RCM process, such as appointment and payment reminders and engaging insurers regarding claim denials, can significantly reduce administrative and time burdens.

Healthcare changes quickly, and knowledgeable administrative staff will be better prepared to adapt to regulation changes around healthcare billing and address them before they become issues that can negatively impact the organization’s ability to manage the process. Organizations and patients can both work through these changes by using an online patient portal that integrates the healthcare billing system into a patient’s electronic medical records.

Challenges and How to Solve Them

At any step along the care continuum—from the moment the patient makes an appointment to the successful collection of payment—many errors and challenges can slow or interrupt the revenue cycle, impacting an organization’s ability to receive timely payment. Human error is probably the biggest challenge. Whether a patient inadvertently fails to submit a payment on time or a staff member miscodes a claim, these errors can dramatically increase the time it takes to receive payments and can result in lost revenue.

Changing government requirements, healthcare regulations and insurance and reimbursement models further complicate managing the revenue cycle. The increased demand on administrative staff to keep up with these changes while managing the patient financial experience may require additional time to process claims, work through insurer denials and ensure timely payment. This can serve to decrease staff efficiency, resulting in increased time and costs associated with RCM.

Best Practices in RCM

Given the numerous challenges that can get in the way of effective RCM, time-tested best practices for hospitals and healthcare practices have emerged. One approach is to have a revenue integrity strategy to help increase payment collection and improve the overall revenue capture. Stated simply, revenue integrity is linked to operational efficiency, compliance and earned reimbursement. Formalizing a revenue integrity program can help prevent ongoing issues related to lost or delayed revenue and compliance risks at every step along the continuum of care.

Likewise, tracking claims throughout their lifecycle and focusing on accuracy significantly reduces the likelihood of claim denials while providing a mechanism to quickly resolve issues when they arise. This means having administrative staff track claims from initial submission to payment collection. It also means learning from past experiences and looking for trends or common errors to ensure the revenue cycle is moving efficiently and revenue is not delayed or lost. A key to maintaining a focus on accuracy is providing regular trainings and education for administrative staff. These can be formal training sessions led by experts in RCM or even gatherings among staff to discuss key learnings and best practices for improving the process.

Fundamental to ensuring a smooth process is collecting patient information, ideally even before they arrive for their first appointment. This information is the foundation for claims that will be submitted and processed, and the care with which it is collected can impact how long it takes to receive payment. Likewise, collecting patient payments as quickly as possible—often at or in advance of care—is critical to managing the revenue cycle. While private or government insurance plays a major role in determining the patient’s financial responsibilities, having transparent and early discussions will help patients understand the process and timeline. While this is a critical step to ensuring timely payment, it also contributes to whether a patient has a positive financial experience and can impact their overall healthcare journey.

Increasing Revenue Through RCM

The goal of effective RCM for any hospital or health system is to streamline the revenue cycle and ensure payments are collected with little to no impact on the organization’s ability to provide care. By simplifying and streamlining this payment cycle, an organization can decrease the number of errors and redundant processes and lighten the burden on administrative staff, reducing the time it takes to process and collect payments. The benefits of this can be twofold: increasing revenue (and lowering debt) with more time to focus on delivering quality care to patients.

The Future of RCM

As insurance programs continue to evolve and patients assume greater financial responsibilities, the result is a shift in RCM in healthcare. This is further propelled by technology that is transforming the revenue cycle by reducing errors in coding and ensuring timely payments and transparent billing discussions and practices.

There is also the ongoing impact of the Coronavirus (COVID-19). Since hospitals and health systems embraced telehealth as a viable care option amid the pandemic, the platform has shown promise in enhancing the ability to generate revenue. By reducing the time and staffing constraints of physically seeing a patient, telehealth could allow practices to increase their patient loads, representing a new revenue stream.

As the pandemic continues, patients are becoming more involved in their healthcare and approaching the journey with an increasingly consumer mindset. They are seeking transparent pricing, seamless and contactless billing and easy access to their account history. When assessing an approach to RCM, organizations must remember their relationship with patients no longer stops with the care team. A transparent and convenient financial experience is an opportunity to build loyalty while impacting the bottom line.

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