Data-driven solutions to improve revenue cycle management (RCM)

For many healthcare systems, it’s easy to fall into the routine of day-to-day operations and traditional accounting practices. However, identifying inefficiencies in the revenue cycle (RC) is essential for maintaining financial stability and growth.

Efficient revenue cycle management (RCM) is the cornerstone of streamlined billing processes and maximum revenue collection for healthcare organizations. Revenue cycle inefficiencies are estimated to cost the U.S. healthcare industry billions of dollars each year, imposing a significant financial burden on the system.

Given the complexity of revenue cycles, internal teams often struggle to identify bottlenecks and improvement opportunities. This is where data-driven external assessments become invaluable, revealing financial vulnerabilities and providing actionable solutions.

Leveraging Third-Party Assessments for RCM Optimization

An external assessment delivers an unbiased analysis of a hospital’s revenue cycle, free from internal politics or organizational blind spots. Experts can identify inaccurate or inconsistent coding, streamline claims submissions, and improve follow-up processes.

Beyond operational insights, these evaluations ensure compliance with regulatory guidelines, helping to prevent costly penalties. For healthcare administrators and executives, optimizing revenue cycles is a top priority, and leveraging these independent assessments is a powerful tool for mitigating financial risks and enhancing performance.

These evaluations equip hospital administrators with actionable data to make informed decisions about resource allocation, technology investments, and staffing. They also benchmark performance against industry standards, providing a roadmap for continuous improvement and better patient care.

A Real-World Example of Revenue Cycle Optimization

A regional healthcare system struggled with persistent revenue cycle challenges. Despite effectively managing its substantial managed care revenue, its fee-for-service (FFS) revenue significantly underperformed.

Despite consistent charges, days in accounts receivable (AR) remained stagnant, and collected revenues failed to improve.

Recognizing the issue, the company sought an external evaluation of the FFS revenue cycle. The assessment team conducted interviews, gathered extensive data, and delivered a concise, actionable report with creative, sustainable solutions.

Key Assessment Findings

The assessment identified several financial vulnerabilities:

• Excessive clinic lag days impacting 50+ clinicians
• High volume of unbilled claims
• Inaccurate Days in AR metrics
• Backlogs of claims older than 120 days
• Missing allowables in the practice management system
• Low net and gross collection rates
• Elevated denial rates
• Excessive credit balances

These issues disrupted the revenue cycle and strained cash flow.

The Results

In response, the healthcare system initiated a six-month program to address the assessment’s findings. With a focus on data accuracy, clear timelines, and attention to detail, the program achieved remarkable results:

• Implemented structured front-office and revenue cycle policies, from patient check-in to claim follow-up.
• Lowered denial rates by over 10% through aggressive management.
• Dramatically improved gross and net collection rates.
• Reduced Days in AR by 10 days and decreased lag days.
• Raised clean claims rates to 100%.
• Reduced credit balances by over 10% in six months.
• Simplified reporting to focus on key value-added metrics.
• Aligned data with industry standards.

After six months, results showed a significantly improved return on investment (ROI) on the restructured revenue cycle, improved financial consistency, and a management team equipped with advanced tools and streamlined processes to achieve sustainable growth.

Essential Questions for a Healthcare Revenue Cycle Assessment

When considering an RCM assessment, healthcare administrators should ask the following questions:

1. What areas will the assessment address to identify inefficiencies?
   • The evaluation should focus on critical challenges, such as denials, lag days, and unbilled claims‍
2. How will the assessment address the unique complexities of our system?
   • Tailored insights provide actionable solutions to meet your organization’s specific needs.
3. What metrics and benchmarks will the assessment provide to guide improvement?
   • Clear recommendations and benchmarks enable continuous progress and measurable success.

Conclusion

A well-structured assessment provides the insights healthcare systems need to optimize financial performance, streamline operations, and focus on delivering exceptional patient care. With actionable data and a roadmap for improvement, organizations can transform inefficiencies into opportunities, ensuring financial stability and growth.

Ready to improve your revenue cycle management? Contact our healthcare team at Elliott Davis to learn how we can help you develop a tailored roadmap for improved financial performance and efficiency.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.