How to Measure the Effectiveness of Revenue Cycle Management in Healthcare

Healthcare providers are increasingly concerned with enhancing the quality of service while at the same time being concerned about payments and collections. Because of a loss of economic automation tools and a scarcity of available resources, they are forced to depend on outdated ways. When using the standard technique to handle the revenue cycle, it is difficult to get an accurate picture of expenses, expenditures, and income, while at the same time, the inability to track down revenue leaks makes it tough to handle account receivables.

Since 2018, upwards of a third of healthcare organizations have had yearly bad debt of more than $10 million. The issue is worse due to unpaid invoices, with an estimated $125 billion in overdue and underpaid claims being lost each year. Therefore, an increasing number of healthcare practitioners are seeking the assistance of revenue cycle providers to streamline their revenue collection processes and reap the many advantages of healthcare revenue cycle management. Managing the complete revenue cycle of healthcare providers and ensuring that there is no delay due to repetitive work or revenue collection leakage is known as Revenue Cycle in the healthcare industry. The RCM process begins with the patient booking a visit, continues with the patient getting treatment, and culminates with the patient making a payment to the provider of care services.

Determine the cost of patient billing

Medical Billing and Coding Services Fees are the money generated by a physician who relies on paying their medical expenses. In order to do this, practically all practices, whether small or big, place a high value on the effective administration of their money. This involves clinical billing, receivable accounts, and comprehensive revenue cycle management.

Medical billing is a specialist profession, and finding the correct human resources to handle this time-consuming work for your clinic entails significant financial investment and strong managerial abilities. The majority of physician practices, as a result, contract with a medical billing business to handle their billing administration.

Measure financial, operational, and patient-reported data

The financial situation of a hospital is a multifaceted notion that may be examined along with various aspects, including capital structure, costs, profitability, liquidity, and overall efficiency. The primary goal of healthcare financial management teams is to ensure that institutions such as long-term care facilities operate as effectively and economically as possible. General Managers rely on finance specialists to supply them with accountancy and other fiscal data to enable them to make sound business choices. Producing revenue, monitoring internal expenditure, preserving the hospital’s tax-exempt status, and identifying aspects of financial strength and weakness are the four parts that make up financial management in healthcare.

• Increasing the amount of money received by the hospital

Finance managers assist hospitals to generate money to cover expenditures and fund expansion. This usually entails investing in assets, updating healthcare costs to suit market rates, assessing hospital department performance, and introducing new services.

For example, outpatient hospital finance managers may encourage upper leadership to spend on inpatient treatments to increase revenue. A project proposal detailing anticipated expenses to begin the service, prospective financing sources, and yearly profit estimates is prepared if top managers accept the concept.

• Keeping the hospital’s tax-exempt status is important

Non-profit health institutions must maintain their tax-exempt status since the state, and federal governments are always seeking new funding streams. The healthcare financial management team at a healthcare institution is concerned with ensuring that tax exemption standards are met. For example, it might restrict prices for destitute patients, perform a neighborhood needs assessment, and create an action plan to meet those needs.

• Internal Spending is being closely monitored

One of healthcare management’s financial aims is to monitor hospital expenditure. This form of financial assessment in healthcare is used to assist managers to uncover fraud or financial mismanagement. Physicians are frequently watched since they control most hospital and nursing facility expenditures. For example, a physician may prescribe medication and equipment that does not meet patient requirements, causing high costs and legal risks. To address this behavior, the hospital’s financial management team might form a dedicated committee to examine all medicine and equipment purchases regularly or annually. If there is proof of deception, the hospital may either discipline the physician or charge him with a crime under federal forgery and abuse statutes.

• Having an impact on third-party payers

Insurers and other third-party payers cover some or all of a patient’s medical expenses. It is very uncommon for third-party payers to demand steep discounts from healthcare providers when they provide services to many patients. But hospitals can lose money if they don’t get paid for their services. By negotiating stronger contracts with insurance companies, the healthcare coverage financial management team creates methods to assist the institution to avoid financial risks connected with third-party payer arrangements.

Measure claims rejection rates

Your revenue cycle management process’ success may be measured by looking at the denial rate, which is the proportion of claims that were refused by payers during a specific time period. Cash flow is good if the rejection rate is low. The sector has a 5-10% denial rate, but the wanted rate is much lower, at 5% or less. Claims that are refused by insurance companies should be added together and divided by total claim submissions in order to determine the rejection rate of your practice.

Reduce denials

Provide a service, file a claim, and be paid. Getting compensated for your services should be simple. Many things may go awry in this procedure, from your practice’s faults in coding and data entry to the sophisticated coding adjustments your payers make. There may be more than one source for the rejections, so try running reports for a week or more. Denial grounds, procedure codes, modifiers, diagnostic codes, and payers should be included in the reports.

The next stage is to educate staff members, create practice management notifications, and execute additional remedial procedures. When submitting corrected claims, consider utilizing a standard form. Next, keep an eye on your practice’s progress and give feedback to individuals engaged in addressing the rejections. Set incremental objectives for your most important denials and reward yourself when you achieve them. In the long run, a practice may save $4,500 per year in claim correction expenses for every 15 rejections it avoids each month by using this strategy. Cost reductions and increased cash flow may significantly impact a practice’s financial health, especially in an era of diminishing reimbursement rates.

Set KPIs to measure your success

There is a wide range of data that healthcare personnel must manage in order to offer the best possible treatment, maintain sustainable hospital performance, and efficiently control expenses in today’s world. Managers can improve these procedures and benefit hospitals and their patients using a professional healthcare dashboard. A professional’s ability to thrive is determined by his or her ability to use the proper tools. This includes healthcare analytics tools and, most crucially, the appropriate measurements. A complete healthcare report is an ultimate step in enhancing efficiency when all of these parts are gathered and arranged.

Hospital administrators and healthcare personnel should be familiar with the following KPIs and metrics:

1. Average Hospital Stay: Evaluate the length of time patients are staying
2. Bed Occupancy Rate: Monitor the availability of hospital beds
3. Medical Equipment Used: Track the utilization of your equipment
4. Improve medication cost management for patients
5. Calculate the cost of treating a patient at your hospital.
6. Achieve a healthy balance between patient room turnover and quality and speed.
7. Patient Follow-up Rate: Measure the care for your patients over time
8. Hospital Readmission Rates: Track how many patients are coming back
9. Patient Wait Time: Monitor waiting times to promote patient satisfaction
10. Patient Satisfaction: Analyze patient satisfaction in depth
11. Workers to Patient Ratio: Ensure you have adequate staff to care for patients
12. Appointments canceled due to patient absences are recorded.
13. Patient Safety: Prevent mishaps from occurring in your hospital
14. ER Wait Time: Identify the busiest hours at your emergency room
15. Costs by Payer: Be aware of your patient’s health insurance plans.

Eliminate billing delays

Medical billing is the backbone of revenue cycle management in healthcare, yet many providers have substantial issues effectively and properly billing patients and payers for the services they deliver. The medical billing process may be difficult for some providers when it comes to being paid since it includes many people in the industry. An organization’s ability to effectively share and record critical information with other departments and payers is critical.

The following are effective strategies for reducing billing errors and increasing the percentage of clean claims. This leads to enhancing the total reimbursement rate and simplifying cash flow.

• Complete all the necessary fields of your medical bill
• Implement technology-driven solutions
• Use the latest coding manual
• Filing claims within designated deadlines
• Hire a Billing specialist

No question, medical billing may be confusing. But when you do billing responsibilities effectively and in a timely way. It will greatly increase your practice’s total reimbursement rate and cash flow. All you need is to engage a qualified or well-educated billing crew. Who is efficient, industrious, organized, and thorough?