When you go to a doctor’s office, you typically don’t have to pay for the service out of pocket right then and there. In some instances, you might have to pay a copay, but the provider will need to collect the bulk of the payment from the insurance company. In other instances, you might get a bill weeks or even months after a service has been rendered. A good revenue cycle management process will ensure billing and payments roll in and out efficiently.
Medical practices have their work cut out for them when it comes to revenue cycle management (RCM). In fact, one recent study found that the average primary care practice was expected to lose nearly $68,000 per full-time physician in 2020 due to RCM challenges.
Keep reading to learn about some of the common revenue cycle management challenges medical providers face — and what your practice can do to overcome them.
Healthcare Revenue Cycle Management Challenges
Here are some of the main revenue cycle management challenges practices face.
1. Collecting payments in a timely manner
One of the biggest challenges providers face is struggling to receive payments shortly after services have been delivered. In fact, nearly half of healthcare leaders recently agreed that collecting payments is the biggest challenge their practices face. In the era of ever-increasing deductibles, patients are expected to absorb more costs out of pocket and, unfortunately, that can present a challenge. To this end, a 2017 report found that 68 percent of hospital patients with bills under $500 didn’t pay their full balance. When money doesn’t come in quickly to your practice, it’s that much harder to keep operations running smoothly.
2. Spending too much time on revenue cycle management
Medical practices are in the business of helping people experience healthier, happier lives. They’re also in the business of optimizing the revenue cycle to continue fulfilling their mission. Oftentimes, practices lack the resources and tools needed to manage RCM effectively. This results in team members spending way too much time on RCM instead of focusing their energy on other important areas of operations.
3. Dealing with too many coding errors
Coding errors — including upcoding, unbundling codes, inappropriate modifier use, and unlisted codes without documentation — cost practices time and money. When providers are still relying on an old-school approach to revenue cycle management, they often end up having to deal with a ton of claim rejections. When those rejections are handled by hand, costs add up.
4. Lacking deep insight into the revenue cycle
Many healthcare providers have a hard time getting the insights they need to figure out the best way forward and ensure their approach to RCM is optimal. With the right tools in place, it’s possible to get complete visibility into the revenue cycle and measure KPIs — like cost to collect, claim rejection rate, and percentage of cash collection from net revenue. Over time, practices can continue to optimize these KPIs, building a stronger and stronger RCM engine because of it.
What to Look For in a Revenue Cycle Management Partner
To overcome these challenges, more and more healthcare practices are investing in purpose-built revenue cycle management solutions. While the market for RCM solutions brought in $98.4 billion in 2020, it’s projected to generate upwards of $230.3 billion by 2027, and for good reason: the technology enables practices to solve their revenue cycle challenges.
That said, not every revenue cycle management solution is the same. As you begin searching for a revenue cycle management partner, here are some things to look for:
- Proven software. When you invest in robust medical billing software solutions, it’s much easier to process claims, verify insurance eligibility, and automatically remind patients when payments are due without much manual intervention required.
- RCM services. Instead of managing the revenue cycle internally, you may be best off outsourcing these responsibilities to a third party. The right partner can increase your clean claims up to 99 percent while giving you direct access to a team of billing experts.
- A track record of success. As you begin narrowing down your options, look into what clients are saying about each provider. It should be easy to identify proven leaders in the space — as well as those who are lagging.