Effectivity of RCM in Healthcare

How To Find Out The Effectivity of RCM in HealthCare

It is always a challenging task for any business growth and promotion to make a profitable balance between the inputs and outputs. We always face the outcomes of what we have seeded earlier. For healthcare facilities, the inputs are providing services for patient care and treatment. On the other hand, the outputs are the financial stability for the system and hence the provider via effective revenue cycle management. Unfortunately, every time things do not go with the flow as we have planned due to multiple factors participating in the entire loop.

Statistical Analysis of Healthcare Financial Conditions

Healthcare organizations usually have a limited budget for their settings. The only way to increase their economy is to get the account receivables collected on time. Otherwise, they will automatically meet the multiple influencing consequences of bad debts. Kaufman Hall reported the results of its survey conducted in August 2020. It reflects the following statistics since the pandemic recrudescence:

Hospitals with an Increase in Bad Debt


Uncompensated Care


Uninsured Self-pay Patients


Medicaid Patients


Bad debts seem to be a persistent problem in all healthcare settings for a very long time. Anyhow, bad debts and uncompensated care has created worst financial conditions due to two main factors:

  • Loss of Economic Automation Tools
  • Scarcity of Available Resources

It is quite true that RPA automation for medical billing and other administrative roles is now available to us. But still, they are inaccessible to many of us as they are too costly.

In such a scenario, healthcare facilities are left with no choice than depending on outdated resources. Here we have a problem with this traditional setting of healthcare in-house revenue cycle management. In-house RCM encounters the inability to track down revenue leaks. This makes it tough to handle the account receivables eventually. So, hiring a third party for revenue cycle management is the right choice.

Another survey of hospital executives has pointed out the risks to the healthcare economy by increased bad debts. Since they are unrecoverable, nobody will like to deal with them. However, the survey reports claim;

  • 36% of hospitals have faced a $10 million loss due to bad debts.
  • 6% have dealt with more than $50 million in bad debt.

Anyhow, effective revenue cycle management has a considerable effect on lessening bad debts. They perform significant steps with advanced strategies for healthcare’s healthier financial future.

Checking the Effectivity of Revenue Cycle Management in Healthcare

Revenue Cycle Management is the discipline concerned with account receivables handling. The process initiates from the patient’s first appointment. And, it continues till the patient’s last visit. The responsible team members do their job and submit the revenue claims. The effectiveness of an RCM depicts on

  • Their swiftness in collecting revenues
  • Helpful strategies to deal with denials
  • Reduction in the number of denials and rejected claims

RCM has a direct influence on the financial constraints of a healthcare setting. It helps the facilities to do an economical and efficient medical practice. The revenue cycle management does the financial management job for healthcare. It makes the cash flow in form of revenue in the following ways;

1. Enhanced Revenue Production Rate

The provider serves the patients with their expert services whenever they meet them. In other words, the services they deliver generate revenue for them. More production of revenues, more money for hospital’s fund expansions and expenditures. A reliable RCM team, therefore, makes positive investments in their directional moves. For example,

  • Healthcare Cost Updation as per the Market Rates
  • Assessment of every Hospital Department Performance
  • Introduction of New Service for Vast Patient-care Coverage

By streamlining all these investments, revenue cycle management experts secure long-term benefits for their bright future. For example, an outpatient finance manager may guide you to spend more on in-patient treatments for increasing revenue. Here an expert RCM team presents the came up with the proposal covering;

  • In-patient service anticipation costs
  • Supporting financial resources
  • Annual Revenue Estimates

2. Monitoring of Internal Spending to Uncover Mismanagements

The providers are closely linked with all hospital and nursing facility expenditures. That’s why they are monitored for their internal spending. Sometimes they use some treatments/equipment that don’t go for the patient’s needs. This may elevate the legal risks for them. Even sometimes matters like over-coding and extra-coding are also observed.

For all such affairs, the RCM may establish a special team to look into all purchases of supplies and equipment on a yearly or more frequent basis. That’s how the financial management team eliminates this fraud habit. The hospital has the option of taking action if there is evidence of dishonesty. They may discipline the doctor or file a federal forgery and abuse complaint against him.

3. Revenue Recovery from Third-Party Payers

The cost of a patient’s medical care is partly or fully covered by insurers and other third-party payers. Third-party payers very seldom demand significant reductions from healthcare providers when they serve a large number of patients. However, if hospitals aren’t reimbursed for their services, they risk losing money. The healthcare coverage financial management team (RCM) develops strategies to help the institution minimize financial risks associated with third-party payer arrangements. They negotiate better contracts with insurance companies.

4. Reduced Claim Rejection Rate for Your Practice

The percentage of claims that payers reject within a certain period is known as the denial rate, and it may be used to assess the effectiveness of your revenue cycle management process. If the rejection rate is low, the cash flow is favorable.

The sector’s denial rate ranges between 5 and 10%, while the wanted rate is significantly lower—5% or less. The number of claims that insurance companies reject should be summed together and divided by the total number of claims submitted to calculate your practice’s rejection rate.

5. Elimination of Billing Delays

The foundation of revenue cycle management in healthcare is medical billing. Many providers face significant challenges when it comes to accurately and effectively pay patients and payers for the services they offer. Since there are so many participants in the medical billing process, it could be challenging for some doctors to get paid. It is crucial for a business to efficiently exchange and record important information with other departments and payers. This is only possible with the help of efficient revenue cycle management.

Here are some practical methods for lowering billing mistakes and raising the proportion of clean claims. This improves the overall reimbursement rate and streamlines cash flow.

  • Fill out every field on your medical bill that is required
  • Use technologically based metrics
  • Use the most recent code guide
  • Submitting claims by the schedule set
  • Employ an RCM billing expert


RCM and Medical billing can certainly be complex. But when you carry out your billing duties efficiently and on schedule, the overall reimbursement rate and cash flow of your practice will rise significantly as a result. All you need to do is hire a knowledgeable or educated revenue cycle management team.

1 reply
  1. Joseph
    Joseph says:

    “What methods or metrics can be employed to assess the effectiveness of revenue cycle management (RCM) in the healthcare industry?”


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