Exploring the link between healthcare revenue cycle management and financial sustainability
The challenges today’s medical practices face are numerous: Competition from healthcare disruptors, unpredictable payer denials, healthcare staffing shortages, and so much more. Financial sustainability sometimes feels like an unattainable goal given the ever-evolving pressure to collect and leverage clinical and administrative data, promote operational efficiency, and leverage technology to meet healthcare consumer demands. Although provider fiscal sustainability requires physicians and practice managers to innovate various aspects of practice management, perhaps the most important area is revenue cycle management (RCM). Effective RCM is necessary to ensure financial sustainability because it:
1. Promotes critical cashflow. Eighty-two percent of the time, poor cashflow management is the reason why U.S. small businesses fail. How do you know when a cashflow problem exists? When your expenses exceed your cash. It’s all about submitting medical claims in a timely manner and ensuring those claims are paid the first time around. Timely, clean claims are the key to an efficient and effective revenue cycle that ensures you have cash when you need it most—both in the short- and long-term. Inflation complicates things. Due to the impacts of inflation, 42% of business owners say they’re re-evaluating cashflow and spending.
2. Supports patient engagement and retention. Financial sustainability occurs when patients pay their medical bills in full and on time. For this to happen, though, healthcare providers must ensure accurate medical codes. Forty-three percent of all adults say they have received a medical or dental bill they thought contained an error. About two-thirds of these adults say the error involved being billed for something that should have been covered by their health insurance. However, other errors were also reported such as being billed for services never received or for bills that had already been paid. Preventing these medical billing errors as part of an overall RCM strategy helps to build patient trust and engagement that can lead to financial sustainability.
In addition to ensuring accuracy in revenue cycle management collections, healthcare providers must also ensure clear and concise medical bills with price transparency and easy ways to pay online. Incorporating digital tools such as patient portals, mobile patient check-in, and automated eligibility into the revenue cycle management workflow can help medical practices on their journey toward a more effective revenue cycle and provider fiscal sustainability.
3. Advances smooth mergers and acquisitions. When physicians and practice managers take the time to refine and improve the medical practice revenue cycle, they put themselves in an optimal financial position should the opportunity for a merger or acquisition come their way. It’s much easier to pursue financially advantageous business arrangements when all parties have identified and addressed revenue cycle vulnerabilities and gaps. This includes everything from provider credentialing to clinical documentation to medical coding to accounts receivable follow up and more.
4. Supports advantageous payer contracting. Medical practices with insight into revenue cycle and payer-specific trends can leverage data to negotiate favorable contracts. For example, if a payer continually denies a service on the first adjudication but then almost always overturns the denial on appeal, a medical practice could build the case for coverage. Or if a payer typically takes longer than average to pay, a medical practice could argue that payment must be made within a shorter timeframe. Partnering with the right RCM vendor is key.
5. Contains labor costs. An efficient revenue cycle helps medical practices reduce what is often the biggest cost of doing business: Labor costs. Automation and artificial intelligence help make RCM staff more efficient so they can focus on higher value-add tasks such as addressing complex claim denials or answering patient financial questions. Although an efficient revenue cycle management workflow may not enable medical practices to reduce FTEs, what often ends up happening is that those FTEs can accomplish more in the same amount of time which is particularly important during times of business growth or unanticipated surges in patient volume.
Conclusion
Medical practices that understand the link between revenue cycle management and financial sustainability are already ahead of the game. These practices know they must invest in people, processes, and technology to capture all the revenue to which they’re entitled. Prioritizing RCM as part of a larger strategy to promote provider fiscal sustainability is an important step. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
