Why is revenue cycle management important in healthcare?
Healthcare organizations rely on efficient revenue cycle management strategies to maintain profitability. Providers perform crucial services every day and deserve to get paid for their time–but it’s not always easy to collect and process payments from patients. Even the smallest errors can result in substantial financial setbacks which is why RCM services are so important. Here are some specific ways that revenue cycle management optimizes medical practice cash flow:
Improved Insurance Claims Approvals
Effective revenue cycle management experts prioritize accuracy on front-end tasks so medical bills and insurance claims are correctly coded and filed to the patient’s insurance provider. Insurance claims are sometimes denied due to incorrect medical coding, missing chart information, or a lack of prior authorizations. In these cases, medical practices can correct and refile denied claims, but that slows the payment process significantly.
According to the U.S. Census Bureau, one in five patients in America can’t afford their medical bills. That means practices that don’t receive reimbursement through insurance may never get paid for their services. Filing claims to insurance organizations is absolutely essential to ensuring the patient owes the lowest out-of-pocket cost.
Unlike other monetary exchanges, healthcare charges are extremely complex with lots of moving parts. If medical practices don’t have revenue cycle management processes in place, lags in payment can occur. One small error or even a missed follow-up can lead to massive delays. When a practice’s revenue cycle management is working well, there is roughly a 30-day window from service to payment.
Enhanced patient experience, healthier populations
Some patients avoid seeking healthcare altogether because of the fear of “hidden fees.” If a provider performs a procedure or prescribes a medication that insurance won’t cover, then the paying responsibility falls to the patient. These unexpected out-of-pocket expenses hinder a patient’s livelihood and may discourage them from seeking further necessary care.
Revenue cycle management prevents patients from receiving surprise bills and improves transparency among patients and providers.
Reduced administrative burdens
Medical practice management systems help simplify and accelerate essential administrative tasks, such as patient onboarding, scheduling, prior authorizations, insurance verification, and billing. Outsourced revenue cycle management teams take the burden off in-house teams to perform some of these tasks, particularly processing claims.
Overall improved bottom line
Medical practices that have healthy revenue cycle management can proactively assess their profits and losses to ensure that expenses aren’t outpacing revenue. Financially stable practices can invest in their facilities, instrumentation, and personnel to reduce staff burnout and improve patient outcomes. They’re able to pay competitive wages to attract and retain top talent, reducing costs associated with a high staff turnover rate.