Tackling the bottom line: strategies for streamlining healthcare operations

For more than 120 years, the American Hospital Association (AHA) has been a leading advocate for all types of hospitals, healthcare networks and their patients and employees¹. From legislative and regulatory debates to judicial matters, it has led the way in ensuring its members’ needs are not only heard but addressed. This includes the compilation of its annual Costs of Caring report² and the 2024 edition has once again highlighted the significant financial pressures facing healthcare providers.

“Simply put, the costs of providing care often outstrip levels of reimbursement … by a lot,” the report reads³. “(Several) factors are creating headwinds and obstacles that threaten access to care for millions of Americans.”

With similar pressures being felt globally, there has rarely been a greater need for health executives to optimize revenue cycle management (RCM) and ensure prompt and accurate payment for the care they provide.

What is healthcare revenue cycle management?

Healthcare revenue cycle management (RCM) is the process hospitals and healthcare providers use to facilitate billing and collection of revenue for medical services. Incorporating various stages from a patient scheduling an appointment to final payment, quality RCM is essential for strengthening revenue and boosting a healthcare organization’s financial performance. Furthermore, an effective system can aid regulatory compliance and improve patient satisfaction.

^{Source: Revenue Cycle Management Market Size | CAGR of 11.4%}

Six stages of healthcare revenue cycle management

Revenue cycle management consists of six distinct stages, each of which must be managed to an optimal level to ensure enhanced financial operations.

1. Patient intake and scheduling: the revenue cycle commences the moment a patient reaches out to a hospital or health service. Registration and scheduling allow healthcare providers to collate key data including patient demographics, insurance details and appointment preferences. This can be enhanced by using sophisticated scheduling software to reduce inefficiencies, boost accuracy and help increase patient trust and confidence.
2. Insurance verification and authorization: this step is as much about delivering patient care without delay as it is about finances. Before admission, hospitals and health services must verify a patient’s insurance policy and confirm coverage details such as services covered and co-payment requirements. Confirming specific medical procedures are included will also help avoid insurers denying payments.
3. Clinical documentation and coding: creating a detailed record of every service provided to patients is crucial for ensuring accurate billing. This incorporates medical coding, a specialist skill performed by trained professionals that sees medical services translated into alphanumeric codes. Insurers use these codes to determine reimbursements and poor coding inevitably results in claim denials and underpayments.
4. Medical billing submission: it is now time to conduct a thorough review of each claim before seeking financial reimbursement. Attention to detail is critical as minor errors can impact the flow of revenue, let alone failure to comply with coding protocols. 
5. Payment processing and posting: this is the stage where revenue starts to flow into hospitals and health services. It does not happen by chance though, with checks and balances put in place to ensure all revenue is captured and managed. Receipt dates help indicate an organization’s cashflow and resource allocation, while monitoring partial or missed payments ensures outstanding balances are addressed.
6. Accounts receivable follow-up: while this final stage ensures healthcare providers receive payment for their services, do not make the mistake of thinking it is solely about chasing money. It is equally about nurturing strong relationships with insurance providers and increasing patient satisfaction. Securing timely payments and collecting lost revenue relies as much on effective communication and empathy as it does on strict processes.

Challenges in healthcare revenue cycle management

Various internal and external pressures can impact the ability of healthcare leaders to maintain strong revenues.

• Increasing denials: hospitals and health systems are increasingly finding themselves at the mercy of payers seemingly determined to deny claims. One American Hospital Association study found 89% of respondents have seen a rise in claims being denied⁴ on the back of increasingly complex criteria for claims submission and payers using new technologies to identify potential issues.
• Staff shortages: while automation is helping ease the load, the revenue cycle continues to rely on RCM specialists but many healthcare providers are finding them difficult to recruit and retain in a competitive labor market. This has forced a spike in salaries for quality talent, while many hospitals are relying on less experienced staff.
• Regulatory compliance: health services are continuing to feel the impact of the No Surprises Act of 2022. While the new regulation aimed to minimize unforeseen medical bills for patients, it also resulted in a huge number of claims being sent for dispute resolution⁵ and, in turn, a major delay in payments for hospitals and another body blow for services already under financial pressure. 
• Technology hurdles: the healthcare sector has a reputation for being a late adopter of technologies and while there are indications that is changing, many services continue to ignore solutions and tools that can improve revenue cycle management.

^{Source: What Is Revenue Cycle Management (RCM)? | 2024 Guide (selecthub.com)}

Best practices for healthcare revenue cycle management

Developing a successful RCM program is within reach for healthcare providers that embrace a few key steps.

• Collect more information up-front: do not miss the opportunity to gather as much information about a patient when they first seek care, which may even be before their first physical appointment. This information is the foundation for the claims process and is also a chance to confirm what benefits they can receive and how payments will be made.
• Streamline claims authorization: in addition to collecting payment information up-front, employing an automated system for authorizing claims will simplify the RCM process. Along with saving time by streamlining the submission of individual claims, such technologies can provide patients with instant notifications about whether services are covered or not.
• Study claims denials: resolving claims denials is obviously a priority for healthcare providers but they should also invest in identifying the reasons they occur. Taking the time to record and analyze claims denials can help identify trends or common errors that can be rectified to put a halt to lost revenues.
• Embrace outsourcing: many healthcare providers are benefiting from partnering with outsourcing providers that specialize in revenue cycle management. Along with allowing clinicians to focus more time on patient care, offshore staff can use their expertise in collecting and verifying patient enrolments, insurance details and medical coding to deliver faster claims submissions and payments. Quality outsourcing providers in low-cost economies and convenient time zones also allow health services to provide RCM support around the clock, ensuring a steady revenue cycle.

Conclusion

Revenue cycle management is too important to blindly continue doing what one has always done. From investing in technology and studying denial trends to partnering with a specialist outsourcing partner, there are multiple ways to maximize your hospital or health service’s financial potential and free up clinical staff to focus on what they do best.

Telehealth has become the new normal as an increasing number of patients embrace the freedom and convenience that comes with innovations such as medical apps and online consultations. Discover the benefits of telehealth, explore potential hurdles and learn how outsourcing can boost service offerings.