Health ITHow Optimizing Revenue Cycle Management Can Improve Health Outcomes

Even without dusting off a high school math book, most people would tell you that the shortest distance between two points is a straight line. Too often, we are unable to take that straight path to our intended destination, forcing us to take the long way, sometimes even landing us hopelessly gridlocked in traffic bottlenecks. This analogy is particularly apt when applied to the healthcare revenue cycle. To the uninitiated, the process looks simple enough: patients receive treatment, they pay their portion of the financial responsibility for that treatment. However, those in the know realize that the journey between appointment and final payment is a twisty path with many potential obstacles.

Unfortunately, there is very little that is straightforward about the complicated, often labyrinthine functions of the healthcare revenue cycle. Even the most convoluted traffic detours usually lead to the intended destination, but it’s hard to say the same of the way doctors receive payment. The culprits are a motley cast of characters, ranging from the shift to value-based care payment models and the complexities of regulatory compliance to coding complications, denied claims, and a tangle of payers. For the purposes of this article, let’s focus specifically on how patient payments factor into this complex situation.

The Patient Payment Landscape Has Changed

Ostensibly, the purpose of the healthcare industry is to promote the health and wellbeing of patients. The revenue cycle supports the ability of healthcare providers to deliver care and services by generating income through the collection of payment. However, the payment ecosystem for healthcare providers has been changing rapidly, due in part to the ubiquitous nature of high-deductible healthcare plans (HDHPs). Because of rising deductibles and other patient out-of-pocket costs, patient payments now account for over 30 percent of the overall payer mix, a 45 percent increase since 2012.

Collecting from patients, especially once they leave the provider’s office, is notoriously difficult. In fact, it is listed as the #1 patient payment challenge according to the 2018 Healthcare Business Strategy and Technology survey. Another survey, conducted by the Healthcare Financial Management Association (HFMA), revealed that 60% of patients never pay their medical bill after leaving the office. Compounding the general difficulty of collecting from patients is the fact that it can take 5-7 months to collect in full and is 2-3 times more costly than collecting from other payers. Paying more to collect less reduces overall revenue and may prevent practices from reinvesting in providing higher quality care with better facilities, better staff, and better treatment options.

Costs and Payment Issues Impede Preventative Care

When the processes of healthcare revenue cycle management are inefficient, none of the intended purposes are achieved. Rather, medical providers fail to collect the revenue they need to stay in business, patients accrue piles of bad medical debt, and ultimately, the health and well-being of whole communities suffer.

You may be thinking that the previous statement seems to be a stretch—but consider this: according to a 2014 Gallup Poll, 1 in 3 Americans don’t get the healthcare they need because of costs. These costs refer not only to the actual costs themselves, but the unknowable nature of them as well. According to a 2017 Kaiser Health Tracking Poll, 45% of Americans said they’d have a difficult time paying an unexpected medical bill of $500 or more.  The fear of unknown healthcare costs especially affects preventative care measures because people don’t go to the doctor until the healthcare issue has become too serious or painful to overlook.

While opinions are mixed on whether preventative care truly drives down the cost of healthcare overall, it is an undisputed fact that preventative care improves quality of life. Potentially preventable, chronic diseases are responsible for 7 out of every 10 deaths in America and account for 75% of healthcare spending. Health problems also drive down economic productivity due to missed work days by $260 billion each year.

Those who seek preventative care at every stage of life contribute to overall community well-being.  Encouraging patients to seek preventative care via regular health screenings and adult vaccinations is also a cornerstone of the evolution towards value-based care, which is rapidly gaining ground. In a value-based care reimbursement scenario, the U.S. must make the transition from caring for sickness to promoting wellness.

Adopting Efficient Patient Revenue Cycle Management is a Must

Reduced costs, healthier children and communities, greater stability and productivity– seems like a no-brainer, right? Clearly the healthcare industry must take any steps necessary to encourage patients to seek preventative care. Effective revenue cycle management is one way to do this as it has the potential to benefit patients, providers, and the healthcare industry overall by removing the obstacle of unknown and unanticipated healthcare costs.

For medical providers, the time and costs associated with the collection of patient payments can decrease their ability to provide quality service and care for their patients. In addition, as patient retention becomes a growing concern, medical providers must seek ways to improve the patient experience that build trust and promote loyalty. Any impediment that keeps doctors and medical staff from interacting positively with patients and patients from seeking preventative care must, therefore, be removed.

In order to achieve the end goal of healthier lifestyles that include appropriate preventative care, providers can start by taking steps to demystify the revenue cycle. These steps include:

Provide Price Transparency Tools

Make it easier for patients to understand and pay medical bills with increased price transparency that allows patients to see what they owe pre-arrival, at time-of-service, at claim submission, and post-surgery. According to Barron’s MarketWatch research, failing to compare prices on healthcare is the single worst financial mistake patients are making when it comes to healthcare. Indeed, as the more tech-savvy, youngest generations are making up more of the population, healthcare comparison shopping is becoming much more common. Therefore, providers should invest in price transparency tools to safeguard their future patient retention.

Allow Patients to Set Up Payment Plans

As previously stated, many patients delay or forgo preventative care measures and treatments because of high, unknown costs. While many preventative care measures are currently covered by private and governmental insurance, others, especially non-traditional measures, may not be. In these cases, providers should allow patients to set up payment plans for large balances. Studies have shown that when patients can set up a regular payment plan with their provider for preventative care with a shared cost component, patients are more likely to seek the treatment.

Adopt the Right Patient Revenue Cycle Tools

Even a seemingly small adjustment such as adopting effective revenue cycle management tools will lead to a streamlined revenue cycle from appointment to final payment. This is especially true of solutions that automate many manual back-office tasks, reducing the time and costs to collect and allowing office staff to focus on more patient-centric retention elements.  A more engaged staff that is not weighed down with revenue cycle-related tasks will lead to more satisfied, more loyal patients. The savings in collection costs, combined with higher levels of collected revenue, allow providers to reinvest in the practice itself.

Without a doubt, the journey towards a better healthcare system involves many moving parts and improving the patient revenue cycle is only one small piece. However, the negative influence of inefficient revenue cycle practices on people’s health should not be overlooked and may be potentially mitigated with the right adjustments.

This post has been sponsored by Health iPASS

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Allyson Howard

Allyson Howard

Allyson Howard has been crafting brand voices through articles, whitepapers, eBooks, blog posts, and other marketing copy in a variety of industries for two years. Her ghostwritten articles have appeared in several trade journals, including Group Practice Journal and HFM Magazine. With her background in secondary education, she has the ability to demystify complicated concepts and make them more accessible to the average reader. She holds a B.A. in English and Education from The University of Iowa, and a M.S. in Professional Writing, with a focus on writing for the healthcare professions, from New York University. She currently works as the Senior Marketing Copywriter at Health iPASS, a Chicago-based healthcare IT company.


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    Katie H

    April 11, 2020 at 3:28 pm

    Hi Allyson, you have beautifully explained how Revenue Cycle Management can transform the healthcare industry. I agree with your opinion and if there’s no proper revenue management system, a lot of time and costs will be consumed in the collection of the payments from patients. This will eventually degrade the quality of the service and the attention of the patients. Keep sharing!!


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    July 27, 2020 at 9:08 pm

    Hi Allyson! I am so glad, I found this, It was interesting when you talk about this article. It is very challenging to keep standards of the ever-advancing field of physician revenue cycle management (RCM). We assure that healthcare providers are fully updated concerning the recent improvements in their billing environment. We also provide a full suite of physician medical billing services to fit your requirements.


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