Challenges That Directly Affect The Hospital Revenue Cycle Management
The global Healthcare Revenue Cycle is expected to reach USD 65.2 billion by 2025 (Source - Business Wire). This includes a vital component called Hospital Revenue Cycle Management (HRCM).
HRCM is a financial management of administrative and clinical functions associated with claims processing, payment, and revenue generation in hospital. It involves the identification, management and collection of revenue from patients for services rendered.
Hospital Revenue Cycle Process (HRCP) is a procedure that pertains to complete lifecycle of a patient’s account rather than merely collecting bills. It includes all administrative and clinical functions that contribute to the capture, management and collection in the medical billing cycle for patient care starting from registration and appointment scheduling to the final payment of balance.
Due to declining cash flows, tight margins, ever rising health care costs and bad debts, it’s more important than ever before to maintain a steady stream of income for hospitals. This can be done by deploying Healthcare Consulting Services (HCS) who help in optimizing the hospital revenue by bridging the gap between the business and clinical aspects of healthcare.
Challenges in HRCM
- Errors in the billing and collection process due to lack of competent medical billing process
- Shortage of capital and /or hospital infrastructure to effectively implement and use Healthcare Information Technology
- Inadequate training if medical staff leading to discrepancies in capturing and billing patient data sufficiently
- Inability to closely monitor the complete lifecycle of the claims process closely leading to claim denials
- Price transparency issues
- Lack of a comprehensive and well defined financial policy that holistically deals with all aspects like regulatory compliances, patient guidelines for bill payments, unpaid balances and insurance tracking and claim denial
The Factors that directly affect your Hospital revenue cycle
- Provider efficiency –This pertains to performance measurement of hospitals, which consistently deliver good clinical outcomes without resource wastage and utilize this information to support benefit designs, network management and medical publications. This individually or collectively, might induce patients to choose efficient hospitals.
- Patient volume - Patient volumes are dependent on the number of patient encounters in hospitals which includes inpatient discharges and emergency service encounters. Increased patient volumes has a positive impact on hospital revenues and vice-versa. Additionally, increase in the number of returning patients, value-added services and enhancement in out-patient services also significantly builds revenues.
- Service fee –Service fee involves a payment model where healthcare services may be unbundled and paid for separately. It is an incentive for physicians to provide more treatment .Each service such as a doctor visit, test, procedure, or other health care service generates income and payment is made after the service is provided.
- Insurance claims - A insurance claim is a detailed invoice sent to the health insurer which shows exactly what hospital services the patient received and the amount to be reimbursed. It has a direct impact on increasing revenue while rejected claims decrease it for not meeting the required criteria for payment approval.
- Payment collection-This is crucial for maintaining hospital bottom line .With increased focus on patient centricity, hospitals will have to find mechanisms to meet patient demand for convenient, transparent and reliable payment methods including digitised options since delayed payments jeopardizes the revenue margins.
With the rapidly evolving transformations in healthcare and increased patient demands, HRCM plays a critical role in sustaining the hospital income for continued services. HCS greatly help hospitals in optimizing HRCM for increasing income by guiding them on various aspects including
Updating patients on medical billing status, promoting greater staff involvement and internet-based medical billing, utilizing data analytics for clear- cut financial statistics, improving the probability of timely payments and doing periodic review and updates of revenue cycle processes.