Healthcare providers today face increasing cost pressures and inability to grow their revenues which can lead to diminished operating results. A survey conducted by AMGA in 2017 revealed that the operating loss per physician increased from 10% of net revenue in 2016 to a loss of 17.5% of net revenue in 2017. The survey participants included nearly 50 medical groups and health systems, representing more than 13,000 providers.
Unlike other businesses, medical practices can’t pass on rising costs (e.g. increasing rents, employee salaries, etc.) to patients, making it critical that they look for ways to control costs.
However, the same financial struggles that physician practices are experiencing are also present in hospitals. Both nonprofit and for-profit hospitals are seeing revenue decline and losses mount as new reimbursement models emphasize shorter stays and more care delivered in outpatient settings.
The results of the survey show that healthcare providers face a significant challenge to grow their revenues and need to reconsider their revenue cycle strategy. Here are 3 tips for improving your revenue cycle management:
Implement cost-effective technology for better financial performance
High tech can cause high costs for practices and ultimately average up to $32,500 per doctor annually according to the Medical Group Management Association (MGMA). That’s why it’s important for healthcare providers to implement cost-effective technological solutions and not just ride every digital wave. The transition to provide higher-quality, value-based care is becoming increasingly expensive.
According to MGMA, better-performing practices can do the following:
Control information technology (IT) expenses
Spend less on operating expenses
Achieve greater physician productivity
Implement better practice operations
MGMA also found that hiring more nonphysician providers and support staff can make practices more profitable and productive.
Healthcare providers should use cost-effective technology every single day to deliver exceptional service in every patient interaction. Digital solutions in managing revenue cycle management is important for streamlining patient encounters and payments. HIMSS researchers suggested that healthcare organizations should consider a more automated approach to the revenue cycle management to improve work flows and decrease human error and labor costs.
Improve claims denial management
In revenue cycle management, if an error occurs in any part of the cycle, it could have a major and rippling effect of the overall revenue cycle performance.
A 2016 HIMSS Analytics Survey showed that approximately one-third of healthcare providers still use a manual approach to manage claim denials. It also showed that only 44% of the providers surveyed used automated claims denial management and 18% had an in-house program.
Reducing the number of denied claims can be achieved when healthcare providers include in their revenue cycle management a claims denial prevention system. This kind of system can track and pinpoint the root cause of claims denials, the number of claims denied, and who are the physicians involved. This can greatly help in determining denial rates and track these patterns. Every denial needs to be reviewed and effective improvement efforts need to be made collaboratively.
Track key performance indicators
What you can’t measure, you can’t manage. To put it simply, data should be the primary driver in your organization’s revenue cycle decisions and strategy. Key performance indicators and quality assurance checks inform revenue cycle managers about the financial health of their organization and ensure that data is accurate. Efficient revenue cycle management relies on measuring key indicators, setting goals, and continuous improvement.