4 Ways to Improve Revenue Cycle Management at Medical Practicesimprove revenue cycle

In any healthcare organization, complacency in revenue cycle management (RCM) can be dangerous. With the move to value-based care and the decline in reimbursement rates, it is even more important to adopt a policy of constant improvement. This is essential for the financial well being of the hospital or practice.

Yet, cutting costs and improving efficiency at a healthcare organization is easy to say but difficult to implement. The biggest difference between other industries and healthcare is that providers of healthcare cannot turn away patients who need them.

To be paid for services provided, practices must navigate a maze of payers and rules for claim reimbursement. The rising popularity of high-deductible healthcare plans, where patients pay a low premium in exchange for a high copay, has further complicated the healthcare reimbursement scenario because it increases the points of contact a practice must maintain to obtain payment.

The key is to stay on top of changes in healthcare reimbursement and consumerism. The strategy should be to keep an open door and respond to changing market demands and consumer trends. In this challenging scenario, here are 4 ways to improve revenue cycle management at medical practices.


Traditionally, revenue cycle management in healthcare organizations is split into front-end and back-end operations. Front-end operations include processes that involve patients, such as registering new patients, collecting information, and confirming eligibility. Back-end operations include managing claims and denials, medical billing, and collections. Although these tasks are distinct from each other, they must work in synergy for efficient healthcare payments.

A key strategy for revenue cycle management at medical practices is to break down the barrier between front- and back-end processes. A seamless revenue cycle is more likely to result in faster and more complete reimbursement.

At one community hospital in Illinois, improved collaboration between front- and back-end processes resulted in a 300 percent increase in patient collections. The hospital had a highly segmented process, where each individual only knew their role in the revenue cycle. This resulted in a knowledge gap among staff about the patient’s financial responsibility and the processes necessary to complete a claim.

The hospital turned the process on its head and began focusing more on front-end operations rather than the traditional back-end operations to collect payments. This strategy allowed front office staff to view the status of a patient’s account and anticipate possible challenges in payment. It not only resulted in reduced costs but also improved outcomes.


Experts say that it is impossible to manage something that hasn’t been measured. In other words, data should drive revenue cycle management in healthcare. Data tells revenue cycle managers about the financial wellbeing of the organization and points out potential bottlenecks in fast and accurate reimbursement.

It is essential for medical practices to track key performance indicators (KPIs). These measures bring immense value to the table in terms of defining the standard and comparing performance to benchmarks.

Key performance indicators very quickly show managers if the revenue cycle is trending in the right direction. If the news is good, you know you are on the right track. If the news is not so good, there is an opportunity to manage resources and workforce in a way that it will positively impact the revenue cycle over the next 30, 60, or 90 days.

According to experts, the five key performance indicators that every medical practice should track are:

  •      Days in accounts receivable
  •      Claim denial rate
  •      Collection percentage (cash collection/total service revenue)
  •      Denial write-off percentage
  •      Cost to collect

These KPIs and other data should be shared with all staff who are involved in the revenue cycle. This helps non-clinical staff better understand the process and improve efficiency. It is essentially a matter of making sure people understand the revenue cycle and are motivated to reduce costs and improve outcomes. To this end, the data collected by tracking revenue cycle management is an invaluable resource.


High-deduction healthcare plans are becoming increasingly popular. In exchange for a low premium, patients assume greater financial responsibility for their healthcare bills.

This trend of patients shouldering more healthcare costs has made it imperative for medical practices to manage patient financial responsibility. Surveys show that in 2016 nearly 70 percent of patients with bills under $500 did not clear their dues. And unfortunately, the number of patients who do not pay their bills is on the rise.

Late payments and unpaid bills directly affect the revenue cycle of a medical practice. Not only is payment not received, but staff must spend valuable time and resources on following up with patients in an effort to collect overdue payments.

To address patient financial responsibility, revenue cycle managers can implement the following strategies:

  •      Offer multiple payment options at the point-of-service and pre-service
  •      Offer financial estimates pre-service

The ability to offer pre-service price estimates is key, say experts. Surveys show that patients are more likely to meet their healthcare financial obligations if they receive a cost estimate upfront. Software tools are available to medical practices to prepare these cost estimates. These tools rely on historical data to create an estimate of allowable expenses for a specific procedure by a specific payer.

To boost point-of-service collection from patients, medical practices should enforce a policy of credit card information on file. This policy has shown dramatic results at some organizations which saw a nearly 30 percent drop in accounts receivable within six months of implementation.


To reduce costs, payers are increasing the requirements for coverage eligibility and prior authorization. In fact, MGMA reports that more than 85 percent of medical practices saw this trend in 2017.

This increasing requirement can be troublesome for medical practices. In practical terms, it means a physician’s judgment is constantly being questioned. Health plans that require a large number of medical tests, medications, and procedures to be pre-approved are associated with delays in treating patients. Needless to say, it also drives up the administrative cost for the medical group.

The key is overcoming this hurdle is to make the eligibility check and pre-approval process automatic. Administrative costs can be crippling if a medical practice performs these tasks manually. Surveys have shown that manual prior authorization costs an average of $7.50 whereas electronically this can be done for under $2.

Unfortunately, the adoption of electronic claims management by medical practices has been slow. This is despite the fact that automated preauthorization processes make the revenue cycle seamless. Whereas prior approvals almost always delay care, automating the process reduces the burden on staff, allowing them to focus on other key tasks such as payment collections at the front desk.

Contact us for help improving your revenue cycle.

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