5 Ways to Help Improve Revenue Cycle Management in Healthcare

A provider's financial performance is based on a cycle of steps — from the first time a patient gets in touch until the final payment is collected.¹ But as providers are facing shrinking reimbursements, higher deductibles, value-based reimbursement and increased patient responsibility, it's important to take a closer look at healthcare revenue cycle management (RCM).

To keep that cycle running smoothly, every step in the process matters, from front-office tasks such as scheduling and registration, to back-office tasks like clinical care, coding and billing. When completing these tasks manually, there's more room for error, which could result in delayed or decreased reimbursement. Implementing RCM best practices can help improve the patient experience while also protecting the practice's bottom line.²

Why Revenue Cycle Management Is Important

Examining RCM and implementing some related best practices can help you manage your healthcare revenue cycle performance. Improving RCM can enable healthcare practices and organizations to maintain financial stability while also delivering high-quality patient care. More specifically, an optimized approach to healthcare RCM can:³

• Eliminate coding and billing fraud

• Eliminate patient fraud

• Enhance compliance

• Improve the patient experience

• Reduce/eliminate denial of claims

• Reduce the administrative cost of billing and denial processing

• Reduce the gap between submission of claims and payment

Improving Revenue Cycle Management

To help improve revenue cycle performance, you can measure your performance and take other steps to determine benchmarks, track the revenue cycle and identify positive revenue movement as well as areas that need adjustments.

1. Manage what you measure

You can track key performance indicators (KPIs) to understand your RCM. The KPIs you decide to track will depend on your goals. Consider tracking these KPIs, which are closely related to RCM:⁴

• Point-of-service (POS) payments. This refers to payments received at the point of service and up to seven days after. To determine this KPI, divide those payments by the total self-pay cash collected.
• Clean claim rate. This is the average daily number of claims that don’t require editing compared to the total number of accepted claims.
• Days in accounts receivable (A/R). This focuses on the average time it takes to get paid for services and helps determine the effectiveness of reimbursement for services and the management of accounts receivable. To find this KPI, divide the total A/R by the average daily net patient service revenue.

You may also want to track these additional KPIs:³

• Payments as a percentage of net patient service revenue. This tracks your ability to convert net patient services revenue to cash. To find this KPI, divide the total collected POS cash collections by the average monthly net patient service revenue.⁴
• Days in total discharged not final billed (DNFB). This KPI shows the impact on cash flow from claims inputting and issues related to delayed claims. Divide the total dollars in DNFB by the average daily gross patient service revenue to identify the KPI. A higher rate may indicate that you submitted claims incorrectly.
• Net collection percentage. This confirms the accurate posting of adjustments and shows that accounts are either collected or appealed, rather than written off. To calculate it, subtract refunds from total receipts and then remove contractual adjustments. Then divide the first value by the second.
• Cost to collect. This KPI measures efficiency and productivity. To calculate, divide the total revenue cycle cost by the total cash collected.
• Resolve rate. This explains the overall effectiveness of the RCM process. Divide the total number of claims paid for a defined period by the total number of claims to find this KPI. A higher percentage is better.⁵

2. Prioritize point-of-sale collections

The patient has always been at the center of health and wellness, and this principle shouldn’t be any different for patient collections. As patient responsibility for the cost of care continues to grow, many patients may be unaware of how much they owe or have concerns over the affordability of high deductibles.⁶ It can be helpful to strive for a careful balance of identifying costs, communicating costs and collecting fees early to help your patients meet their responsibilities.

Consider exploring these strategies to help boost patient satisfaction, expand awareness about financial responsibilities and payment options and, ultimately, help increase POS collections:⁷

• Provide a thorough explanation of what to expect from the visit.
• Review coverage options with uninsured patients.
• Confirm health and wellness history, demographics and insurance information early to reduce claim denials and expedite reimbursement.
• Revalidate insurance information with subsequent visits to avoid eligibility denials.
• Offer flexible financing options such as third-party financing, like the CareCredit health and wellness credit card.

3. Invest in employee training

RCM is not formally taught in clinical training, which can leave gaps in understanding the process.³

You can foster employee teamwork and collaboration by educating your staff on how each role affects patient collections. Fill in any necessary knowledge gaps to help create more seamless, accurate and faster reimbursement. Consider offering mentoring and training on RCM best practices related to billing forms, coding, chart documentation, revenue cycle software and insurance verification.

Educational opportunities can provide a better understanding of the role each person plays in your organization's financial success and may improve efficiency while reducing claims denials.

4. Deal with claim denials

Early identification of errors can save time for your healthcare billing team. To avoid pushbacks instead of payments, ensure claims are as clean as possible. Accurate documentation helps optimize patient collections since denials can be prompted by:³

• Coding complexities
• Duplicate claim submission
• Incorrect demographics
• Miscommunications
• Missing information or misspellings

Using a manual process increases the likelihood of human error and may require more time to manage data effectively. It can result in lost revenue and increased demand on the administrative staff’s limited time, too. Automation, on the other hand, may help identify denials and the reasons behind them, creating a more streamlined denial management process.⁸

5. Consider revenue cycle automation tools

More than 1 in 5 healthcare organizations are not yet using or in the process of implementing RCM automation, as noted in a survey commissioned by AKASA.⁸ And of those surveyed who are currently using or implementing RCM automation, only 39% calculate their return on investment (ROI) to understand the impact this automation is having on their organization.⁹

For the remaining 78% who have committed to automation, more streamlined RCM processes can not only save time but also improve providers’ bottom line.⁹ In fact, according to a 2024 CAQH study, streamlining administrative processes with automation saved the healthcare industry $222 billion in 2023.¹⁰

Focusing on improving efficiency by automating repetitive tasks may help improve RCM. Coordinating communication can reduce lost paper documentation and allow employees to focus on more complex, high-priority tasks such as collections, services to be billed, timely filing of claims and insurance deadlines.¹¹

RCM software can usually stand alone or may integrate with Electronic Health Records (EHR) and may help automate repetitive tasks such as:¹

• Automating appointment and payment reminders
• Clearing patients before their appointments to reduce rework and potential denials 
• Creating patient statements
• Following up on claim status¹¹
• Validating eligibility status¹¹

Tracking claims after submission may help determine the cause of pending, rejected or denied claims and reduce recurrences. Switching to an automated process for prior authorization and coverage eligibility may reduce unnecessary costs. Automating the process could lead to fewer delays in patients getting the care they want or need.

Revenue Cycle Management Improvement

When implemented effectively, RCM best practices can improve financial performance and enhance the overall patient experience. By improving RCM today, providers can be better prepared to navigate the rapid and ongoing changes within the health and wellness industry.¹²

A Patient Financing Solution for Health and Wellness Providers

If you are looking for a way to connect your patients with flexible financing that empowers them to pay for the care they want and need, consider offering the CareCredit credit card as a financing solution. CareCredit allows cardholders to pay for out-of-pocket health and wellness expenses over time while helping enhance the payments process for your practice or business.

When you accept CareCredit, patients can see if they prequalify with no impact to their credit score, and those who apply, if approved, can take advantage of special financing on qualifying purchases.* Additionally, your practice or business will be paid directly within two business days.

Learn more about the CareCredit credit card as a patient financing solution or start the provider enrollment process by filling out this form.

Author Bios

Maureen Bonatch M.S.N., R.N. draws from roles in nursing leadership, education and psychiatric nursing to write healthcare content. Her extensive experience in recruitment, procedural development, and retention tactics contributed to the reduction of staff turnover and improvement of morale. Maureen has written or contributed to the authorship of a wide range of website articles, healthcare journals and in the creation of online educational content. She is also a prolific fiction author.

Suchi Rudra is a content writer and journalist with more than 15 years of experience in creating B2B content for small businesses and major brands and writing reported feature articles for consumer and trade publications. Her writing has focused on emerging tech and entrepreneurship, real estate, sustainable building plus design, travel and education. 

Healthcare payment and financing solution

The CareCredit health and wellness credit card helps improve the payment experience for patients and clients, and your financial performance.

Get Started