Every hospital is focused on its revenue cycle. No different from a corporation, hospitals have obligations to their board members and the executive team. They also have an obligation to their patients and staff. Hospital revenue cycle management is one of the most effective ways to improve the bottom line, which is part of what makes a hospital successful.
Without the ability to manage their revenue cycle, hospitals have no way to budget for their financial obligations. Management of the revenue cycle gives hospitals an opportunity to plan for the coming quarter or year.
What is Hospital Revenue Cycle Management?
A hospital’s revenue cycle is all of the clinical and administrative tasks associated with capturing, managing, and collecting patient payments. It looks at all of the functions from the creation of an account to the final payment on the account. A robust revenue cycle might even calculate how much each step of the process costs the hospital.
Hospital revenue cycle management requires keen attention to every aspect of a patient’s interaction with a hospital. There are several places that revenue can be lost, especially as it relates to insurance claims:
- No referral to see a specialist when a referral is required
- Registration, coding, and/or billing errors in data entry
- Unverified health insurance
- Underpaid health insurance claims
- Denied health insurance appeals
To ensure a hospital has a healthy revenue cycle, it needs to find ways to reduce instances of unpaid or underpaid claims while simultaneously maximizing the amount of revenue it collects from patients.
How to Optimize the Hospital Revenue Cycle Management Process
Optimizing the hospital revenue cycle management process is one part analyzing historical data and one part predicting the future based on historical findings.
1. Encourage Patients to Apply for Financial Assistance Early
Hospitals lose a lot of revenue to unpaid medical bills. For a lot of patients, though, financial assistance is available for emergency medical care and medically-necessary services. While hospitals cannot conduct debt collection practices in the emergency room, providing information about financial assistance with discharge papers can encourage people to apply for help before their account is past due. Hospitals cannot discourage people from seeking medically-necessary care.
If a patient has more than one medical bill that needs to be paid, they are able to apply for assistance for multiple billing statements. Hospitals must give their patients a 120-day notification period and a 240-day application period to apply for financial assistance. For multiple bills, they may look at the most recent statement as the effective date.
2. Perform a Community Health Needs Assessment
One of the IRS Section 501(r) requirements is that hospitals must perform a Community Health Needs Assessment (CHNA) once every three years. This assessment covers a significant amount of information, like what defines the community and what medical needs people have. The CHNA should have input from community leaders, especially those with expertise in public health. Once the assessment has been conducted, a strategy must be put in place to address the concerns.
A CHNA can give hospitals insight into why people aren’t using their services. If community healthcare needs aren’t being met, hospitals will see a decline in patient services. Hospital revenue cycle management relies on having a stable, if not growing, set of patients. It also relies on having patients that trust the facility.
3. Review Processes to Find Weak Points in the System
The best way to update a hospital revenue cycle management system is to review how things are currently working and find ways to improve them. For example, if claims are being left unpaid because of registration, coding, and billing errors, a hospital may want to look into systems that reduce the amount of manual data entry being performed. Streamlining processes can make the revenue cycle more efficient.
Some of the best processes to review include how medical care is coded for insurance claims, how costs are calculated that might result in underpaid claims, and how to ensure insurance is verified more quickly. It may be worth looking into how hospital staff impacts the revenue cycle compared to healthcare technology.
How Technology Can Impact Hospital Revenue Cycle Management
When it comes to hospital revenue cycle management, technology like medical billing software can create a significant increase in revenue streams. Technology has the ability to reduce errors in transmission as well as verify information that was submitted by a patient.
Other ways technology can impact hospital revenue cycle management are:
- Improving the quality of financial assistance applications: Not only does technology increase the number of applications, but it gives people a user-friendly way to provide accurate data that improves the quality of financial assistance applications.
- Increasing how much patients pay for their bills: When patients have access to transparent billing statements, they are more likely to review them and set up payment arrangements. Medical billing software gives patients multiple payment options for convenience.
- Encouraging patient engagement: Patients that engage with their healthcare facilities tend to be happier with their quality of care. The happier patients are, the more predictable their revenue cycle becomes, which makes management much easier.
Technology can also make employees more efficient. This is yet another way that hospitals can improve their revenue cycles – more efficient employees mean more work gets done in the same amount of time, which means less money is spent on payroll.
Why Optimize Hospital Revenue Cycle Management Today
While hospitals certainly have some security in any economy, the most successful hospitals know how to optimize their hospital revenue cycles. They constantly strive to innovate processes that increase revenue while working to eliminate procedures that contribute to inefficiencies. They are updating their policies before the IRS even updates theirs.
Optimizing hospital revenue cycle management gives every hospital the chance to improve the patient experience by making financial assistance easier to get and increase hospital revenues through patient engagement and quality of care.
Every hospital needs to spend time reviewing their revenue cycle whenever they can.
