Lost Revenue: Uncovering Inefficiencies in Healthcare Revenue Cycle Practices

In healthcare, the revenue cycle refers to managing and collecting payments for healthcare services. It starts when a patient is scheduled to receive healthcare services, and ends when the provider receives compensation. During the process, the revenue cycle includes:

• Patient Registration

• Verification of insurance coverage

• Coding of medical procedures

• Billing and claim submission

• Denial management

• Appeals

• Patient collections

• Financial reporting

Each step is crucial to ensuring that healthcare providers receive accurate and timely reimbursement for their services.

Healthcare practitioners and facility centers must manage the revenue cycle effectively to ensure they are financially stable and can continue providing high-quality patient care.

Effective revenue cycle management can help healthcare practices reduce costs, improve efficiency, and increase revenue.

How Are Inefficient Revenue Cycles Affecting Healthcare Practices?

Regardless of the size of your healthcare practice, proper revenue cycle management (RCM) processes are essential for optimizing your financial performance.

With outdated or inefficient RCM procedures, your approach is likely wasting valuable resources, missing payments, and even unknowingly leaving money owed on the table. Because of this, it’s increasingly important to measure your RCM’s financial efficiency.

A comprehensive evaluation will help you identify areas detrimental to revenues, so you can make adjustments needed to improve cash flow and mitigate further losses.

Factors Affecting Revenue Cycle Processes

These steps will help ensure your practice is aware of all potential losses due to inefficiency and neglect in its revenue cycle process.

Inaccurate Coding And Billing

Inaccurate coding and billing can significantly impact the revenue cycle process in healthcare practice. Here are a few ways that this can happen:

Rejected claims

When claims are submitted with incorrect codes or billing information, they are likely to be rejected by insurance companies. This results in payment delays and increases the workload for the billing department.

Delayed payment

Inaccurate coding and billing can lead to delays in payment from insurance companies, which can impact the cash flow of the healthcare practice. This can cause financial strain on the practice and affect its ability to provide quality patient care.

Compliance issues

Incorrect coding and billing practices can result in compliance issues with regulatory agencies, leading to fines and penalties. These can also damage the reputation of the healthcare practice and impact patient trust.

Underbilling

Inaccurate coding and billing can lead to undercoding, which prevents the practice from receiving proper reimbursement. It can result in lost revenue and impair the practice’s financial health.

Lack Of Proper Documentation And Record-Keeping

Lack of proper documentation and record-keeping can significantly impact the revenue cycle process in healthcare practices since they ensure that healthcare services are accurately coded, billed, and reimbursed. With improper documentation, it can be harder to determine the medical necessity of service. This often results in denials or delayed payments from insurance companies.

Incomplete and inaccurate documentation can also result in coding errors, leading to undercoding or overcoding for provided services.

In addition, inadequate record-keeping can lead to inefficiencies in the billing and collections process, such as delayed or missed claims, which can impact the practice’s revenue flow.

Consequences of Inefficient Revenue Cycle Processes

Healthcare organizations sometimes fail to realize the black holes in their revenue cycle. Often, they lack the time, resources, and tools to fix the issues and improve money-making methods. According to statistics from McKinsey, healthcare centers lose almost 15 cents per dollar because of inefficient revenue cycles.

The consequences of an inefficient revenue cycle process in a health practice can hurt patient satisfaction and loyalty —but that’s not all! Here are a few major impacts that revenue cycle inefficiencies can have on any modern health facility and its patients:

Decreased Profitability

Decreased profitability can result from inefficient revenue cycle processes. Lost or delayed revenue can affect a practice’s ability to invest in new technology or hire additional staff. It can also reduce efficiency and lower productivity, making the problem even worse.

Billing Errors

Inefficient revenue cycle processes can lead to billing errors, such as incorrect charges or late bills, which can frustrate patients. These errors can lead to a lack of clarity and certainty about their healthcare costs, leading to dissatisfaction and distrust of the healthcare provider.

Delayed Claims Processing

When healthcare providers are slow to process insurance claims, providers may become frustrated with the time it takes to receive payment. It can lead to delayed or denied claims and more missed revenue opportunities.

Poor Communication

An inefficient revenue cycle process can lead to poor communication between healthcare providers and patients. The latter may feel ignored or misinformed about the cost of healthcare services. 

An efficient revenue cycle process can significantly impact patient satisfaction and loyalty —patients and billers want the same things during the process: transparency, clear communication, and seamless billing. 

OpenPM is a Revenue Cycle Machine

Open Practice understands how hard you work everyday to ensure that your patients receive the highest quality of care, and recognize that it can be challenging to juggle the complexities of healthcare and the revenue cycle processes. OpenPM simplifies every step of the revenue cycle to ensure that you are getting paid for the services that you provide without sacrificing valuable time and resources to mitigate errors and costly mistakes.

Here are some of OpenPM’s key features that can boost your practice’s revenue:

• Fully integrated clearinghouse

• Balance notifications

• Appointment reminders

• Real-time claim status

Click here to learn more about how collecting patient information during patient registration (a key component of the revenue cycle) can set you up for the future of automation.