In recent years, the healthcare industry has faced several changes—from the updates to the Affordable Care Act to changes in Medicaid and other healthcare programs. All these have presented challenges to hospitals, particularly to their revenue cycles. With new information and regulations, errors are bound to happen, especially when the hospital is ill-prepared for these changes. When the issue is left unaddressed, it presents a serious hindrance to the hospital’s growth and capabilities.
The Importance of Revenue Cycle Management
Revenue cycle management is arguably the backbone of any medical practice. It acts as a bridge between the business and clinic sides of the healthcare industry. As a business, hospitals need to remain profitable to continue serving patients. But a poorly managed revenue cycle puts you at risk of errors that can negatively impact your bottom line.
Patients are also affected by these errors; billing errors can lead to large hospital bills that aren’t covered by their insurance. Fortunately, revenue cycle management software provides you with the necessary assistance in overcoming common challenges. Better training also presents a suitable solution for addressing these problems.
Common Challenges in Revenue Cycle Management
Although there are several solutions available to you, it’s essential that you educate yourself on the common challenges to your revenue cycle. By getting a better understanding of their causes, you can identify potential issues and risks before they balloon into major problems.
1Billing and Collections Errors
Much like any other business establishment, a hospital needs an effective billing process to remain profitable. When this process is rife with inefficiencies, you run the risk of losing thousands to millions in revenue every year.
- Patients are paying more out-of-pocket because of high-deductible insurance plans.
- Hospitals are getting patients without proper insurance, creating situations where there is no guarantee for payment.
- Billing processes that have little to no standard format creates confusion which often results in patients misunderstanding their bill, causing them to pay less than the expected amount.
These problems can be addressed at the beginning of the point of service. During this time, the patient is still in the area, allowing administrative staff to collect the right information for their billing. This also gives the staff enough time to make necessary calls to coordinate with healthcare insurance providers. By improving the data collection process, you address issues that often stem from miscommunication.
2Lack of Technology
Although there is readily available software to improve revenue cycle management, many hospitals fail to realize that this needs to be updated to ensure its effectiveness. This is typical in the industry as it continues to be known for its slow adoption of technological advancements.
- An outdated IT system creates a learning curve for newer and younger staff members as they are not used to its functions.
- A poorly managed IT system can lead to data and security breaches, creating errors that impact billing and collection processes.
- The absence of a patient portal limits how you reach patients for billing and collection concerns.
These problems can be addressed with the appropriate technologies. These days, there are several innovations available to hospitals. Failing to see the value in them will only create a gap between your hospital and the digital-first society. Additionally, the absence of certain technologies can be a cause for patients to look for other healthcare providers.
The human element plays a role in how well revenue cycle management is for your hospital. Unfortunately, when there is a lack of training, staff members become a risk to your business.
- Mistakes in medical coding or insurance claim filing will often result in your hospital losing a significant portion of its annual revenue.
- Failure to properly follow up on patients and insurance claims will result in unpaid or underpaid medical bills.
- Lack of organizational skills will result in misplaced or lost paperwork that will make it harder to file claims and collect payments.
These problems can be addressed with the proper training program. When you have new staff members, make sure enough time is allotted for them to be educated on the hospital’s processes. Additionally, if you have updates to processes or technologies, schedule a training session for your staff. Simply introducing changes without the proper time to study them will result in mistakes.
4Absence of a Financial Policy
Your revenue cycle management is nothing without finances. This is why it’s essential for your hospital to have a financial policy; otherwise, you are prone to experiencing the same problems that have been mentioned above.
With the right financial policy, you can identify issues before they evolve into major problems. In addition to this, it gives you a codified process for the different elements of your revenue cycle. Develop your financial policy to be accommodating of your hospital’s IT system and other technologies for a comprehensive solution.