A healthcare organization’s highest priority aligns with excellence in care and improved clinical outcomes. However, financial performance must also be a primary objective. Without stability and reliability, there’s an impact on revenue. As technology and strategy have progressed, so has the ability to optimize and modernize revenue cycle management in healthcare.

Across the stages of revenue cycle management (RCM), opportunities exist to improve workflows, processes and capabilities. Capitalizing on these ensures that cash flow remains steady and improves patient experiences.

Each section below dives into the end-to-end RCM phases: Front-End, Mid-Cycle and Back-End. Explore tips and best practices to minimize inefficiencies and errors while helping you realize earned revenue faster.

What is revenue cycle management in healthcare?

Revenue cycle management in healthcare describes the business processes required for providers to get paid for services. It includes three defined phases:

• Front-End: This phase includes patient access and experience with the subtasks of patient engagement, scheduling, registering, pre-registering, eligibility and enrollment.
• Mid-Cycle: The second segment of RCM focuses on revenue integrity with medical billing and coding, clinical documentation and health information management.
• Back-End: In the last part of the cycle, the tasks relate to revenue management, including AR management, claims resolution, denial management, claims submission and patient collection.

RCM has evolved significantly in recent years. The addition of advanced technology, automation and integrations can help create a unified ecosystem. Many physician practices, hospitals and health systems still struggle to streamline the revenue cycle. Those challenges create higher denials and delays in payment. As a result, organizations must usher in a new era for RCM that leverages all these tools.

What’s the function of revenue cycle management in healthcare?

Delivering patient care and turning that into codes and billing submissions has become very complex. Rules, regulations, compliance and coverage all impact the process. Codes change regularly, requiring deep knowledge and technology-enabled support to prevent errors.

The most concerning of these errors is climbing denial rates. An analysis revealed that these rates are climbing. Initial denial rates hit 10.15% in 2020, then increased to 11.2% in 2022 and 11.99% in 2023.

Considering all the documentation and steps in RCM, the process has become a highly complex business practice. Gaps in any part of the revenue cycle create a barrier to revenue.

The purpose of RCM isn’t solely about payment. The Front-End activities spotlight the patient experience and remove friction. When this occurs, patients have better encounters and interactions. It also ensures downstream issues don’t arise. Improving the workflow from the start can also boost patient satisfaction scores.

RCM in healthcare: Unique to every provider

While the RCM model has common steps, each provider type has specific requirements. As a result, the plans and technology put in place vary across practices, hospitals and health systems. When redefining your revenue cycle, pursue partnerships with organizations with expertise across the spectrum.

For example, hospitals and health systems worry more about scale and volume. Physician practices have more concerns about bandwidth and inefficient practices.

Whatever your circumstances, tailored plans and support should be your objective. With this approach, you  can resolve challenges that derail the revenue cycle.

What are the common challenges in revenue cycle management in healthcare?

Organizations face many obstacles in their pursuit of revenue and patient satisfaction. With any challenge comes the ability to overcome it. Here are some of the common concerns in today’s revenue cycle.

The patient experience isn’t streamlined.

The revenue cycle begins with patient access and experience. Patients may become dissatisfied when it’s disjointed and reliant on paper and manual processes. These touchpoints are an opportunity to deliver exceptional experiences.

Patient intake that’s digital and connected is the key to streamlining this.

Coding errors cost you time and money.

Translating charge capture into codes has never been more difficult. Code updates happen frequently, and there are also issues with upcoding, unbundling, modifier use errors and codes that lack documentation.

Manual coding can be the culprit behind these errors. It’s also time-intensive. Denials and rejections rise in this model. Solving this can involve several areas, such as automation, applying AI to identify trends, code outsourcing to credentialed specialists and using root-cause analysis tools.

Collecting payments from patients is cumbersome.

Patients are now responsible for 22.9% of their medical bills. It’s the result of high deductible plans and higher copays. Almost half of healthcare leaders said this was their top RCM challenge.

Patient engagement should involve financial education, which can eliminate some of the volatility around collections. Ensuring people have information prior to care delivery and have different payment options can help.

Once it becomes a collection, you can tap technology to create propensity-to-pay models. With this intelligence, you can focus on outreach for those most likely to pay. Most importantly, you or your RCM partner should take a patient-first approach.

Outdated RCM technology and workflows make the revenue cycle longer.

RCM can be time-intensive and a burden on internal staff. It’s especially true if you’re using legacy platforms that don’t streamline processes. Manual coding and claims submission slow down the revenue cycle and your cash flow.

Efficiency and productivity flourish when you upgrade your tech stack and take advantage of advancements. A new and automated workflow reduces claims submission time considerably.

RCM visibility is cloudy.

Since RCM involves so many steps, it’s easy to become disconnected from the process. You may struggle to understand your financial performance without access to accurate data and reporting.

Gaining this insight is possible by introducing technology, including AI and machine learning. You’ll be able to identify trends and fix gaps. A 360-degree, real-time view of your revenue cycle supports data-driven decision-making.

Opportunities for modernization and optimization through the revenue cycle

What does modernization and optimization look like in the revenue cycle? You can transform RCM in many ways to boost financial performance and patient experience.

Front-End RCM steps

Front-End RCM starts with patient access. Elevating every interaction and making it seamless is crucial. The first change to make is shifting to a patient-consumer model. When reworking and improving Front-End RCM, keep these things in mind:

• Automation drives innovation: Increase accuracy and automate activities with technology that makes the workflow seamless.
• Standardizing workflows improves efficiency: Ensure complete patient documentation with improvements in intake.
• Supporting the entire patient lifecycle journey is vital: In patient access, you must connect eligibility, engagement, pre-registration, registration and scheduling. Any gaps here cause problems.

With each phase, you can enhance all these areas.

Patient engagement: Communication and direct-to-patient channels keep patients involved. Consistency sets up ideal interactions. Use technology to engage with them in multiple ways.

• Patient scheduling: A platform that manages scheduling creates convenience for patients and staff. Implementing this can reduce no-shows and inbound and outbound phone calls regarding appointments.
• Patient pre-registration and financial clearance: These activities can greatly impact the revenue cycle. Digital and automated patient engagement lifts authorization secure rates. Experts in this area of RCM can provide guidance on using technology and building simplified workflows.
• Patient registration: You can modernize this task with a unified workflow. With automation and integration, registration and insurance verification is accurate and fast.
• Eligibility and enrollment: Creating positive experiences here involves financial assistance consulting for patients. Data from this step can also support predictive analytics to improve revenue outcomes.

Mid-Cycle RCM steps

Revenue integrity defines the Mid-Cycle of RCM. The emphasis in these tasks is accuracy, compliance and establishing proper practices.

In the Mid-Cycle, you can implement these improvements to each activity:

• Medical billing and coding: Errors and challenges are the root cause of stalled revenue cycles. By adopting AI and other advanced technology, you can automate much of this. Additionally, outsourcing these functions is a popular trend, as partners provide credentialed, dedicated coders.
• Clinical documentation: Claims submission must have proper details, but manual compiling is cumbersome. Automation supports these and improves case mix errors while mitigating revenue leakage.
• Health information management: Everything in RCM has compliance requirements. Keeping information secure and accessible is necessary to stabilize the Mid-Cycle.

What can you expect from these enhancements?

Most organizations report outcomes like:

• Higher coding quality and accuracy
• Increased CMI capture
• Faster reimbursements
• Improvements in clinical documentation integrity

Back-End RCM steps

Back-End RCM centers around revenue management. How you manage these impacts when and how you receive payment. Feel confident in your financial stability by refining these steps.

• Claims solutions: Reimagine your claims submission with a partner that incorporates modern features. With this approach, you can automate electronic submissions while remaining compliant.
• AR management: Aging AR affects financial performance and delays payments. These concerns only grow without the intervention of new processes and technology.
• Claims resolution: When you have a complete view of status, appeals, remittance and follow-ups, you understand revenue cycle performance clearly. One key feature to seek is payer behavior analytics to reveal payment variance trends.
• Denial management: Modern denial management encompasses prevention, review and appeals. You can see a reduction by implementing root cause analysis tools to determine the why and define a strategy to address them.

Patient collections: This is a sensitive area, and you want to handle it with care and respect. Chasing collections strains your resources. Instead, focus on those most likely to pay based on data and create payment options for patients.

Revenue cycle management in healthcare: A new horizon for providers

Hospitals, Health Systems and Physician Practices have unique RCM needs and challenges. RCM strategies are never cookie-cutter. They must consider your organization type, patient population, staff capacity, technology stack and more.

When transitioning to modern and optimized approaches to RCM, you need a strong partner that delivers solutions, customized to your organization. With over 35 years of experience in RCM, we help many providers from small specialty practices to major healthcare systems.

You can trust our team to provide results and drive efficiencies that increase cash flow and enhance the patient experience. Get started now by requesting an RCM assessment.