If you enter “benefits of revenue cycle management services for healthcare” into a search engine, most organic results only deliver high-level generic benefit statements. You’ll mostly see points like:
- Reduced operational costs
- Improved revenue
- Better governance compliance
- Better patient experience
But most of these articles leave it at that. They don’t elaborate on the relationships between processes, quantitative data, etc. In other words, the mechanics underneath the statements mentioned above. In this article, we will dive deeper and look at some numbers behind revenue cycle management services and why you should consider outsourcing your practices RCM.
To those still new to differentiating between medical billing and revenue cycle management, please don’t fret. We’ve got you covered. Take a break and watch the video below highlighting the differences between billing and RCM.
If you’re well-versed in revenue cycle management services and are ready to dive deeper into the details, use the table of contents below to skip to your desired section.
Table of Contents
What is Revenue Cycle Management?
Revenue cycle management (RCM) is a crucial process for healthcare practices. It involves the tracking and management of patient financial information, from appointment scheduling and registration to insurance verification and billing, all the way through to payment processing and collections.
RCM is essential for healthcare practices to ensure that they are accurately and promptly reimbursed for their services. In this blog post, we will explore the key steps and benefits of RCM for healthcare practices.
An improvement in revenue cycle management services will not only improve a practice’s financial health but also improve the overall patient experience, which is pivotal to boosting online reviews and testimonials, which is becoming vital for future survival.
Why Should Practices Extend Their Focus from Billing to RCM as a Whole?
After watching the video above, you realized that a comprehensive RCM strategy involves managing the entire financial cycle of a healthcare practice.
While billing and coding are essential aspects of the revenue cycle management process, they are just one piece of the puzzle. By focusing on the entire revenue cycle, healthcare practices can realize the following benefits:
- Improving cash flow
Effective RCM can help a practice to improve its cash flow by reducing the time it takes to receive payment for services rendered. By streamlining the billing and collections process, practices can ensure that they are paid promptly and can avoid cash flow issues.
- Reducing Denials and Rejections
By managing the entire revenue cycle, practices can reduce the number of claims that are denied or rejected. This can be achieved by ensuring that claims are submitted accurately and on time and that any errors or issues are addressed promptly.
- Increasing Revenue
By optimizing the revenue cycle, practices can increase their revenue and profitability. This can be achieved by identifying areas where revenue is lost or not captured and implementing strategies to address these issues.
- Enhancing Patient Satisfaction
A well-managed revenue cycle can also lead to higher patient satisfaction. By streamlining the billing and collections process and providing clear and accurate information about insurance coverage and costs, practices can improve the patient experience.
- Meeting Regulatory Requirements
Healthcare practices must comply with a variety of regulatory requirements, including HIPAA and billing regulations. By prioritizing RCM, practices can ensure that they meet these requirements and avoid costly penalties and fines.
Implementing a comprehensive RCM strategy can help practices to achieve these goals and achieve long-term financial stability.
Recent studies projected that the global healthcare RCM outsourcing market would grow at a compound annual growth rate (CAGR) of 9% between 2020 and 2024. The report cited the cost savings and operational efficiency benefits of outsourcing RCM as some of the key factors driving this growth.
With How Much Can My Practice’s Revenue Increase With Improved Revenue Cycle Management Services?
The percentage of revenue increase with proper Revenue Cycle Management service improvements can vary depending on the following:
- Practice’s current state of RCM
- Practice size
- Specialty of practice
- Level of RCM optimization
- Expertise in outsourced RCM third party
However, on average, healthcare organizations implementing effective RCM practices and technologies can achieve a revenue increase of 5% to 10%.
Healthcare organizations can reduce claim denials, improve collections, and accelerate the revenue cycle by improving key RCM processes such as patient registration, eligibility verification, charge capture, coding, and billing.
It’s worth noting that the exact percentage of revenue increase may vary based on various factors and individual situations and that revenue growth is not guaranteed by implementing RCM solutions. However, proper RCM can certainly help healthcare organizations improve their financial performance and achieve sustainable growth over time.
How Much Can Practices Expect to Save On Operational Costs Following RCM Optimization?
The percentage of operational cost reduction when outsourcing Revenue Cycle Management (RCM) can vary depending on several factors (similar to what we mentioned in the previous section. In case you skipped the previous section, here they are again:
- Practice’s current state of RCM
- Practice size
- Specialty of practice
- level of RCM optimization
- Expertise and costs of outsourced RCM third party
That being said, outsourcing RCM can lead to significant cost savings. According to a survey conducted by Black Book Market Research, outsourcing RCM services can reduce operational costs by an average of 15%.
Similarly, a report by Grand View Research estimated that outsourcing RCM could result in cost savings of up to 30% for healthcare organizations. The report also noted that outsourcing RCM could help healthcare providers improve their revenue collection rates, reduce denials and rejections, and improve the overall efficiency of their revenue cycle processes.
How Much Does it Cost to Outsource Revenue Management Cycle Services?
The costs associated with selecting a third-party vendor to optimize your practices are one of the key factors providers take into consideration. The cost of outsourcing revenue cycle management services for practices can vary widely depending on the specific needs and services required by the practice, as well as the RCM vendor chosen.
RCM vendors can charge a percentage of the amount collected or a flat fee per claim or per service. The exact percentage or fee structure can depend on the following:
- the specific vendor,
- the size of the practice
- the types of services required
- Specific agreement between vendor and provider
If you are looking for a partner to reduce insurance claims denials and underpayments, engage in proper billing practices, improve your practice’s patient experience, and more, Neolytix, with over 11 years of experience in the field, has the expertise to improve your future financial prosperity.
If you wish to learn more about the costs and benefits associated with outsourcing revenue cycle management, schedule a FREE, no-obligation consultation today.