Why Revenue Cycle Management Is Important in Healthcare Systems

Managing revenue is essential for any business to ensure that incoming cash is sufficient to pay for outgoing expenditures. Revenue cycle management (RCM) plays an important role in this, especially for hospital-based physician specialties, due to the complexities of billing and revenue collection. The right RCM solutions can help to ensure the success of your hospital-based service lines like; anesthesiology, radiology, emergency medicine, and hospital medicine.

What Is Revenue Cycle Management (RCM)?

Revenue cycle management (RCM) is the process of handling billing, payment processing, and revenue collection. A revenue cycle is a repeating process that begins with billing a customer and ends with collecting patient payments or writing off the bill. For some organizations, such as retail stores, this can be achieved instantaneously. In others, such as healthcare, it is a more complex process.

Hospital-based physician RCM involves the practices and tools that ensure that revenue cycles proceed smoothly and bring in as much revenue you are legally entitled to, in as timely a manner as possible. Through revenue cycle management, your hospital or medical practice can enjoy a more reliable foundation of incoming and predictable revenue as cash.

How Does Revenue Cycle Services Fit Into Health Systems?

It probably comes as no surprise that RCM is critical to the lasting success of any healthcare organization. The revenue cycle for a health business includes the following steps:

• Claim Preparation: Before submitting a claim, the patient’s information needs to be captured. This typically happens before the first appointment, in the case of anesthesia providers it occurs on the day of surgery. Additionally, the patient’s eligibility and insurance coverage will need to be confirmed.
• Claim Submission: During this step, the claim is created, the charges are entered and coded, then the claim is submitted to the patient’s insurance.
• Claim Management: This stage involves managing the claim during and following the response from insurance. It also involves posting any relevant payments.
• Receivables Collection: During this step, the collection of the payment from the patient (if relevant) is pursued. This can involve issuing statements and sending the bill to collections, if necessary.
• Analysis and Evaluation: Finally, the billing team should collect and analyze data from the RCM software.

RCM systems can minimize the number of errors, increase the likelihood of payment, and avoid aging accounts receivable. Additionally, it strives to increase claims efficiency while reconciling costs against revenues to optimize cash flow.

Why Is RCM Healthcare Services Important?

The reality of hospital-based physician specialty revenue is that the process from initial delivery to full payment is complex. At the very least, this often leads to a protracted delay between service provision and payment collection. In worse cases, it can result in mistakes, confusion, and unnecessary back-and-forth.

Therefore, implementing effective RCM is essential for all health systems. Each hospital service line has an RCM process. The question is whether they are thoughtful,well-implemented, and take the nuances of the specialty into account.

Furthermore, the amount of patient information involved in the revenue cycle means that any errors could have substantial legal (and, therefore, financial) ramifications. Again, implementing revenue cycle management to reduce the likelihood and severity of errors is an essential solution.

What Are the Benefits of a Well-Run RCM Program?

Outsourcing your hospital-based physician RCM to an experienced third-party provider can have significant benefits. These are a few of the most noteworthy advantages:

• Improved Revenue Performance: Perhaps the most significant benefit of an effective RCM program is that you will have enhanced revenue performance. This means money coming in faster, more consistently, and with lower expenses necessary to earn it. In short, the primary goal of revenue control management is to improve your financial performance.
• Greater Visibility: A major element of how effective RCM works is visibility. By increasing the revenue cycle’s visibility and examining data, your team can identify problems and inefficiencies and resolve them.
• Demonstratable Value: Every organization needs to prove its strength and performance to stakeholders. These may be investors, donors, trustees, or strategic partners. High-quality RCM provides you with the data necessary to demonstrate your value. This also makes it easier to align your healthcare organization’s interests with others for mutual success.
• Simplified Processes: Providing a secure and straightforward system to physicians, administrative staff, coding specialists, and others with revenue touchpoints can help to improve your revenue cycle. Excellent RCM not only minimizes mistakes but also removes frustration and confusion for your personnel.

These benefits of excellent revenue control management (RCM) are all available through abeo. Our RCM managed business service could be what your health system needs.