Hospitals, health systems, and small practices are places to provide potentially life-saving services to patients in need of care. Hence, every healthcare organization needs to develop a lucrative process and policies for achieving healthy financial statements. Here, revenue cycle management is imperative for flourishing healthcare organizations, and the primary function of financial measurement in healthcare is to run an organization profitably and effectively.
A thriving revenue cycle ensures well-timed revenue, steady collection, and healthy financial viability for a healthcare organization; these strands focus on providing high-quality care to patients. The main purpose of financial management in healthcare is to oversee cash flow and risk systems to ensure an organization's financial success. Revenue cycle management allows financial process departments and organizations to manage the administrative functions linked to processing medical claims, payments, and revenue generation. These are then used to collect profits and track expenses.
Today’s Top Financial Challenges in Healthcare
Below are a handful of the top challenges the American healthcare system faces today, which in turn impacts the financial health of these organizations:
- Quality. The Commonwealth Fund announced that the United States’ healthcare sector has the highest costs, compared to other countries, and is not performing as well as it could be. Additionally, the U.S. scores low on secure and coordinated care in hospitals. In total, healthcare quality in America is considered to be lower among surveyed individuals.
- Medical errors. A study conducted by Johns Hopkins indicates that medical death rates are higher than those of other countries with developed economies. In the U.S., it is estimated that 250,000 people die per year due to medical mistakes—the third major cause of death in America, following heart disease and cancer, according to the study.
- Mortality rates. The U.S. ranks last on the Health Care Access and Quality Index in terms of amenable mortality among comparable countries. Amenable mortality refers to deaths from a collection of diseases that could be considered avoidable with effective and timely care. At present, the mean mortality rate for all countries included in the Organization for Economic Co-operation and Development (OECD) is 3.8 per 1,000 live births. Whereas the U.S. mortality rate is 5.8 per thousand live births, making it the 33rd country among the total 37 OECD countries.
- Workforce shortages. Rural areas are often confronted with an acute shortage of doctors and specialists. It is estimated that the U.S. will see an a shortage of between 37,000 to 124,000 physicians by 2034 in both primary and specialty care. Patients with health issues may be unable to find qualified doctors in their city or town; they usually depend on individuals’ reviews online. These reviews usually mention friendly staff and wait times but not a given physician's abilities.
- Increased spending. According to an annual report from the Health Cost Institute, U.S. healthcare spending increased by 9.3 percent from 2016 to 2020. Further, McKinsey & Company found that healthcare supply input costs increased during the COVID-19 pandemic (late 2020 to 2021), as other increases where seen among labor costs per adjusted hospital discharge (25 percent), pharmaceuticals (21 percent), supplies (18 percent), and services (16 percent). While many of these costs have improved in 2022, they are still considered to be high. The largest portion of potential extra healthcare costs will be introduced to the system from 2022 to 2023.
Enhancing Financial Revenue
Each healthcare organization needs to stay on top of its revenue cycle to maintain its financial strength. The revenue cycle begins with internal, dedicated staff or outsourcing these services to authorize patients before a medical service is provided, determine patients' benefits, submit claims, manage payments and denials, and generate authentic reports. Therefore, revenue cycle management has a complete walk-through to balance financial measurements. Some tips for enhancing your revenue cycle management include:
- Dedicated staff: If healthcare organizations do not already have a dedicated team of billers and coders, they can an hire external medical billing company for their experienced professionals in the field.
- Prior authorization: In the revenue cycle management process, prior authorization is required before services are rendered. From receiving an appointment call to visiting the clinic, patients' demographics and insurance information are all entered into the organization’s electronic health record, which assists in the prior authorization process.
- Benefits verification: After confirming a patient’s appointment and receiving their insurance information, one should use an online portal or call the insurance company directly to verify the patient’s benefits and identify their financial responsibility (e.g., co-pay, out-of-pocket cost, and deductible).
- Submitting claims: If outsourcing these services, payments cannot be submitted until billing staff properly submit the claims. Additionally, human error can be a factor in submitting claims, while putting data into the practice management services.
- Posting payment: After submitting a claim, the payment should be posted. Revenue cycle management services ensure the billing statement is generated correctly. Posting under the relevant patient and correct date of service is required. If anything entered is wrong, the balance would not correspond precisely, so ensuring staff are selecting the correct patient, service code, and date of service is critical.
- Denials management: The denials management process recovers lost revenue, which can be overlooked if outsourced medical billing companies do not resubmit denied claims.
- Reporting and tracking: Healthcare organizations may face hidden problems that worsen if they cannot generate accurate reports. Outsourced medical billing companies can use tools to define customized metrics, including information management services and financial data, to ensure all reports are accurate.
Benefits of a Booming Revenue Cycle
Internal dedicated staff or outsourced medical billing companies provide a beneficial revenue cycle management process as the American healthcare systems moves toward value-based care, streamlining operational procedures that can help healthcare organizations remain financially healthy.
Outsourced medical billing services help organizations save time by streamlining the revenue cycle management process—from patient registration to appointments—and provide payment reminders to payers regarding claims, resubmitting claims, and denials. These services also help to promptly detect if there are any billing or coding errors, while correcting them quickly.
By focusing on time commitment and reducing human errors, the revenue cycle management process can reduce costs and denial rates by eliminating errors from payment claims. Further, outsourced medical billing services can help accelerate the collection process and reduce the administrative burden by taking care of preparing bills, collecting payments, and submitting claims to payers.
Who is Medcare MSO?
Medcare MSO is a medical billing services provider located in New Mexico that healthcare organizations can engage to improve their revenue cycle management. The leading responsibility of Medcare MSO is to provide problem-solving solutions through skilled and professional medical billers and coders. Our qualified billers and coders ensure patients' information is accurate, check eligibility, submit claims, post payments, and manage denials. For further details, visit the Medcare MSO website.
Thea Sinclair is content writer at Medcare MSO. She holds a current medical billing & coding certification and is member of the American Academy of Professional Coders. She has worked in medical billing and coding for over 6 years, working in a wide variety of medical specialties like evaluation/management, physical therapy, mental health, acupuncture, outpatient and inpatient care, nursing home care, radiology, and wound care. Sinclair has worked in a provider’s office and for professional medical billing services.
