Revenue cycle management is essential to operating a successful medical practice. For one, it directly affects the provider’s bottom line. More importantly, revenue cycle management, or RCM, directly affects the patient and their experience.
To make the most out of revenue cycle management and keep up with healthcare industry changes and trends, providers should fully understand what revenue cycle management is and look for ways to improve their RCM.
So, how can an organization improve its revenue cycle management?
With changes in technology and patient preference, there are many ways a provider can improve their RCM strategy as this means improving their financial health, as well as the quality of their patient care. Let’s dive in.
The goal of revenue cycle management is to increase provider revenue. This makes RCM an important strategy for healthcare providers to utilize, considering it allows them to keep their doors open to treat more patients. However, the providers are not the only ones who reap the benefits of revenue cycle management. With increased revenue, providers can invest more money and time into patient treatment.
In addition to increasing revenue, RCM also decreases the likelihood of insurance claims denials by ensuring that patient information and coding are accurate on submitted claims. When claims aren’t denied, providers don’t have to spend resources investigating and appealing the denial. Thanks to this, administrative staff can dedicate more time to the patient.
The revenue cycle consists of many steps, all of which are crucial to ensuring prompt provider reimbursement. Because they require accuracy, tasks like account creation, pre-registration, insurance eligibility verification, and medical coding take more time to complete.
But in order to receive reimbursement quickly, these tasks also require speed. That’s why providers need to make adjustments and advancements where they can. One helpful advancement is an automated workflow system.
Implementing Workflow Automation
Workflow automation systems are an excellent tool for revenue cycle management. They can be used to:
- Focus on front-end tasks to move claims along quickly
- Migrate patient files and create non-patient files when necessary
- Proactively verify and correct patient information
- Automatically add coded comments
- Confirm insurance information prior to the patient’s visit
- Update outdated or missing policies before an appointment
Implementing workflow automation is one of the most significant improvements providers can make to their RCM. Why?
Because front-end tasks require accuracy, errors can easily occur in the first stages of RCM, resulting in a denied claim. Most errors are due to things like inaccurate or missing patient information and coding. About 90% of claim denials are completely preventable.1
By ensuring patient and claim information is accurate, workflow automation systems minimize the risk of claim denials. This benefits the provider in two ways:
- Increased revenue – When claims are denied, providers are not reimbursed for the services they provided. Since providers perform services before submitting claims, they end up losing that money if a claim is denied.
Plus, to investigate and appeal a claim denial costs providers about $15,000.2 So even if they appeal the denial, re-submit the claim, and get approved, the provider has already lost revenue. That’s why effective prevention of claim denials can result in more than $5 million3 in additional revenue for the average hospital.
- Increased time – Investigating and appealing a claim denial takes time. It pulls administrative staff away from their regular duties. By avoiding claim denials in the first place, administrative staff has more time to dedicate to patient care.
Aside from saving money by avoiding denied claims, implementing automated workflow systems for front-end tasks is actually more cost–effective than manually performing these tasks.
Manually checking prior authorizations and eligibility, for instance, costs providers an average of $7.50 per transaction.4 However, electronic prior authorizations only cost providers $1.89 per transaction. While providers may spend money up front to invest in these automated systems, the systems themselves will more than make up for the cost.
Investing in Staff
Technology is not the only investment that a healthcare facility can make. It’s just as important to invest in administrative staff. Often, front-end tasks are delegated to certain administrative staff, while back-end tasks, such as revenue collection, are delegated to other departments.
By training staff in all areas of RCM through employee education programs, they can have a better understanding of the full revenue cycle, not merely their specific part of it. This makes it easier for administrative staff to understand how they can work together to make the transition from front-end tasks to back-end tasks seamless and efficient.
Understanding Patient Preferences
Patients are the most important factor to consider when running a medical practice. After all, providers can’t experience increased revenue if they don’t have any patients.
Quality patient care is more than just providing treatment. It’s providing a satisfactory experience where patients feel heard, acknowledged, and guided through what may be a very stressful time in their lives. For many patients, healthcare and insurance can be intimidating and confusing. Providers should aim to make the patient experience as stress-free as possible.
One of the best ways to increase patient satisfaction is by streamlining patient tasks. Automated workflows can make it easier for patients to:
- Schedule appointments
- Receive appointment and payment reminders through emails and texts
- Pay bills online
- Set up automatic payments
- Access clinical and financial information through online portals
Patients actually prefer these automated systems. Not only do these systems allow patients to feel more involved in their healthcare, but they’re also straightforward. With automated systems in place, there’s no more confusing and time-consuming back and forth between patients and administrative staff.
By providing a more satisfactory patient experience, a healthcare practice can guarantee those patients will return the next time they need medical care. That means higher profitability for the provider.
Put simply, serving the patient serves everyone.
Collecting Payments Upfront
Aside from patient preference, another reason to set up an automated workflow system is to ensure payments are made on time. Late and underpaid patient financial responsibility slows healthcare revenue collection cycles. With an automated workflow system, providers can give patients financial estimates upfront so that the patient has a better understanding of their financial responsibility.
Another RCM improvement that providers can make is to require patient payment upfront. Point-of-service or pre-payment options can be implemented with automated systems so that patients can easily make payments before services are rendered. These systems also allow for credit-card-on-file services to help boost payment collections.
By enforcing these practices, providers can be paid for their services promptly, avoiding late or lost patient payments altogether.
A data-driven revenue cycle uses certain metrics to help providers better understand their financial health and revenue cycle performance. By tracking their financial performance, providers can get a clear picture of the areas in their healthcare organization where improvements can be made.
Some key indicators to keep track of include:
- Net days in accounts receivable
- Claim denial rate
- Percentage of collections
- Cost to collect
Providers can also improve their RCM by outsourcing it to a third-party company. By hiring an experienced and knowledgeable company to manage their revenue cycle, providers can guarantee the revenue cycle’s success without having to commit excess time to it.
Plus, by not managing the revenue cycle themselves, providers have more time to devote to quality patient care. An increase in prompt, accurate provider reimbursement while boosting patient focus is a win for patients, providers, and administrative staff alike.
Improving RCM for Patients and Providers
The healthcare industry is constantly changing to keep up with technology and patient preferences. There are always new advancements being implemented that work to benefit the provider, as well as the patient. That’s why healthcare providers must never stop asking how to improve revenue cycle management.