What Is Revenue Cycle in Healthcare?
April 08, 2019
The practice of healthcare concerns itself with achieving the best outcomes for patients. In order to achieve those goals; however, the business side of providers’ systems must be operationally solid. That means an unwavering focus on the revenue cycle, from start to finish, along the patient-care continuum.
But what is the healthcare revenue cycle? The Healthcare Financial Management Association defines revenue cycle as “all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue.” Basically, then, the revenue cycle is everything that happens from the moment a patient account is created (at intake, whether that’s a doctor’s office, outpatient clinic, tertiary care center or other site) through payment for the particular treatment, surgery, or care package.
For the revenue cycle to work most effectively it must be predictable. That means its processes must be executed correctly, which is no small task. An early error can derail the process at multiple points along the way, causing errors in billing, slow payments, and other negative actions. Getting things back on track can be time-consuming and costly.
Achieving a Healthy Financial Circulatory System
The healthcare revenue cycle can be likened to the body’s blood flow—if it’s cut off in one spot, the entire system is affected. That’s why it’s important to look at the different administrative and clinical functions that make up the cycle and ensure that each is properly functioning. Any technical or operational solution should consider:
- System Integration: A siloed revenue cycle will lead to lost revenue. Review all integrated software and hardware systems and combine patient electronic health records, accounting, billing, and collections.
- Billing and Claims Management: Improve productivity and speed payables by reducing denials and rejected claims through staff training on denial-management processes, better point-of-service collections, and decreased delays in patient billing.
- Contact Analysis: A fully fledged data collection and management system, alongside a well thought out strategy, will help providers to negotiate better rates and contracts with payers.
- Coding: Physicians and supporting personnel must ensure that they are coding everything correctly, as a single mistake can lead to overbilling and failed audits.
- Clinical Documentation: Like coding, all electronic documentation solutions must integrate with other revenue-collection and monitoring procedures to ensure fewer rejected claims.
Education Is Key for Revenue Cycle in Healthcare
It won’t be enough to implement new systems. Revenue cycle-focused education and training, from live sessions to online learning and webinars, will be key to ensure that doctors, nurses, coders and everyone else understand their role in the revenue cycle. Integration is the new watchword here, as the “back office” concept of revenue collection has become dated and unworkable. Front-line providers, from physicians entering codes during a routine physical examination to nurses and other clinicians documenting care procedures and medications, are key to capturing every aspect of patient care. That capture must be comprehensive, in order to ensure proper revenue.
Billing and revenue collection are often seen as necessary evils, and it’s true that personnel who are taking care of patients should be focused on those tasks. A well-run system for documentation, tied to a robust revenue collection process, ensures that those staffers can focus on providing the best patient outcomes, and the business side of healthcare will take care of itself.
Read other HealthStream blogs about revenue cycle issues and solutions.