In the healthcare landscape, cash flow and medical Revenue Cycle Management (RCM) are closely interconnected. Effective RCM practices directly impact the cash flow of healthcare organizations. Streamlining the revenue cycle, from patient registration to claims submission and reimbursement, reduces claim rejections, denials, and payment delays. This results in faster revenue collection, improving cash flow.
A good example to substantiate this interconnection is the way cash flow got affected across hospitals during the Covid-19 pandemic. The suddenness of the outbreak, the deluge of patients, and the shortage of staff led to inaccurate documentation by and large, inordinate delay in claims submission, gaps in eligibility verification, and a stupendous rise of claims denials had a crippling effect on cash flows. Hospitals were struggling to maintain equipment, get medical supplies on time and pay for staff.
Ensuring steady cash flow boils down to one thing: efficient management of the RCM process. Efficient management can assist organizations in minimizing errors, accelerating reimbursement, and improving overall cash flow. This blog discusses several RCM practices that assist in improving the overall cash flow of the healthcare business.
Cash flow optimization is crucial for business sustenance. Healthcare providers need to balance the inflow and outflow of funds while ensuring the delivery of quality patient care and maintaining financial stability. By maintaining a positive cash flow, healthcare businesses can ensure consistent revenue inflow, allowing organizations to provide necessary resources for patient care. It enables timely payments to suppliers, staff, and vendors, maintaining essential relationships. Adequate cash flow also supports investments in equipment, and staff training, enhancing the delivery of high-quality healthcare. Conversely, poor cash flow can lead to delayed payments, limited resources, and compromised patient care. Therefore, managing and improving cash flow is essential for sustaining financial stability and delivering optimal care in healthcare organizations.
Additionally, healthcare organizations need to manage the fluctuations in patient volume and revenue. Seasonal variations, unexpected emergencies, or changes in patient demographics can impact the flow of patients and revenue, leading to cash flow uncertainties. By optimizing cash flow, healthcare businesses can better anticipate and manage these fluctuations, ensuring they have sufficient funds to cover expenses during low-volume periods.
Best practices should be followed in RCM to ensure optimal performance, efficiency, and safety. Following best practices enables providers to identify and mitigate potential failures before they occur, reducing the risk of equipment breakdowns and associated costs. It helps establish proactive maintenance strategies that maximize asset reliability, availability, and lifespan. Adhering to best practices in RCM promotes consistency and standardization across maintenance processes, enhancing overall operational effectiveness. It also enables providers to make data-driven decisions, optimize resource allocation, and prioritize critical maintenance activities. Yet another benefit is that it fosters a culture of continuous improvement, facilitating the achievement of maintenance excellence and long-term organizational success.
Effective revenue cycle management (RCM) is crucial for the financial success of healthcare organizations. By implementing the below practices, healthcare businesses can optimize their revenue cycle processes and enhance financial performance.
Patient registration is the crucial first step in the RCM process. Errors in information, such as wrong social ID, can lead to billing issues, payment delays, or denials. To ensure smooth cash flow, follow best practices.
Coding and documentation are pivotal in ensuring proper reimbursement and cash flow. Inaccurate or erroneous coding leads to denial or delays in payment. The following practices will help you maintain effective coding and documentation.
Timely and accurate submission of claims increases the chances of complete reimbursements and reduced denials. Delayed submissions will lead to delays or claims rejections. By following the below practices, healthcare businesses can submit their claims on time and accurately.
According to Change Healthcare, out of $3 trillion in medical claims submitted by US hospitals in 2016, an estimated 9% of charges, representing $262 billion, were initially denied
To maintain a positive cash flow, payment processing should be monitored. Inaccuracies, discrepancies in the payment posting, and irregular follow-up will lead to payment delays. To avoid such issues, follow the below practices and improve cash flow.
Without identifying the reasons for the denial, resubmission will be ineffective. To tackle and manage the issues, effectively managing the denied claims is important. The following set of practices helps you effectively manage denials and streamline the process to resolve or avoid denials.
For optimizing the cash flow, the RCM cycle performance should be monitored. Managing your revenue without achieving the KPIs and making the right decisions will be difficult. Here are some best practices to be followed for revenue growth.
While RCM best practices can help you get on top of your cash flow requirements, sustaining effective RCM can be challenging due to the ever-evolving healthcare landscape with changing regulations, coding requirements, and reimbursement policies. Staying compliant necessitates ongoing training, resource allocation, and process adjustments. RCM involves multiple stakeholders, such as providers, insurers, and patients, requiring coordination amidst diverse systems and communication channels. Technological advancements and system integration complexities demand substantial investment and expertise. Overcoming these challenges is possible only when you have the support of a strategic partner for your needs.
Invensis has vast experience assisting healthcare providers in improving cash flow and financial management through sustained revenue cycle management. We stay updated with changing regulations, invest in ongoing training, and allocate necessary resources to keep your finances in the pink of health.
Contact us today to discuss how we can improve your RCM operations!