Revenue Cycle

Recent surveys reveal that hospitals have been losing out by 3-5 percent on their revenue due to inappropriate management of revenue cycle. For an average 300-bed hospital, this means an overall loss in revenue of $4.5-$9 million every year. Insurance denials and low self-pay collection are considered the two main reasons for bad debt, which are quantifiable quite easily. Delayed payments, underpayments, cost of rework and lost charges are more difficult to quantify. However, they are equally problematic for your financial performance.

What is actually behind all this lost revenue? Mainly, it is the inability of consistently meeting ever-changing and complex requirements of payers for timely feeling, medical necessity and pre-authorizations. Communicating such needs across a hospital or multifaceted healthcare system and having the processes in place for appropriately addressing them is a job for a Yeoman to say the least. Recently, many hospitals have carefully worked to improve their revenue cycle. While some of them have noticed a considerable impact on their finances, others have failed in sustaining results. Those, who have been able to maintain a considerable improvement, share numerous characteristics in the accounting structures and the processes. The mistakes committed by organizations, when it comes to their revenue cycle, include: Mistake 1: Relying on backend reworks for correcting frontend errors Processing credit balances and appealing denials are some of the examples of backend rework.

Within a typical office, at least three-quarters of the staff strength is dedicated towards reworking. In fact, most posting of payments and billings of claims are done electronically. Although backend reworks can provide effective results in getting payments of certain types of claims, they are too late in cases of no pre-authorization, incomplete information of insurance, failure to send notification or non-coverage of services. For minimizing rework, it is imperative to develop an effective preregistration and registration process. Both of these processes should be focused primarily on getting all the necessary information for complete and correct billing. Actions should include inquiries as to the level of benefits per patient before the service date and verifying insurance information.

This ensures that there is preauthorization for the right date and service, which allows the billing information of the patient to stay updated. Mistake 2: Not reporting to operational manager about revenue cycle metrics and relying on retrospective report Top performing companies realize the value of reporting when it comes to the ability of a user to act on the information. However, reporting in most healthcare organizations is more retrospective than prospective. For example, managers for registration might receive reports viewing all the denials resulting from access function of patients in the previous month. Although such details are critical for identifying ongoing trends and focusing on problem-solving initiatives, they are obtained at such a stage where it is too late to take an action. Claims are already denied by then and reworks have already begun. In most likelihood, revenue is relinquished. Most reputed revenue cycle organizations work closely with the IT departments for developing reports that can flag those accounts which are likely to get on backend prior to the service date.