Understanding Revenue Cycle DriversPosted by admin | May 18, 2017 , (0) comments
For health care providers, Revenue Cycle Management (RCM) is a major concern. In order to ensure that you receive full payment for all services in a timely manager, it is essential that all financial issues be managed properly from the moment the patient initiates an appointment to the final processing of payment. If you’re trying to optimize or improve RCM in your health care organization, it can be helpful to understand the main drivers of the revenue cycle, which include both internal and external factors.
Internal Revenue Cycle Drivers
The revenue cycle at a health care organization depends largely on some of the inherent qualities of the organization itself. These include:
a) Provider capacity. This refers to the number of patients your organization is able to serve. It places a limit on the total amount of revenue that your organization can accumulate within a given time period.
b) Patient volume. Patient volume is the number of patients for which the organization is providing care. It is determined based on the provider capacity, as well as the demand for the services that the organization provides.
c) Fees. For health care organizations that collect specialized service fees, these can serve as a source of revenue.
External Revenue Cycle Drivers
In addition to internal revenue cycle drivers, there are also external factors that impact the revenue cycle at a health care organization. These include:
a) Claims from commercial insurance companies. As more patients get private health insurance, these claims are becoming an increasingly important source of revenue for health care providers.
b) Government payers. Alongside the growth in the number of patients with private health insurance, there has also been an expansion in the population receiving Medicaid, and as the baby boomers retire, the number of patients who are covered by Medicare is also growing.
c) Patient payment. This refers to copayments received from patients, as well as self-pay from patients who do not have health insurance.
d) Collections. When patients have an outstanding balance on their account that was not covered by their insurance provider, the revenue generated can be categorized as Collections,rather than a standard patient payment.
Given the many inputs and influential factors that inevitably affect RCM, it can be challenging for health care providers to stay on top of it all and optimize the revenue cycle. Therefore, a growing number of providers are looking to outsource one or more steps of the revenue cycle management process.