Revenue Cycle Management In Health Care

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Executive Summary

With rising health care costs, increasing patient volumes, and updated process, revenue cycle management is becoming increasingly important to hospitals trying to maximize reimbursements. However, improving revenue cycle management is challenging for organizations due to numerous industry complexities. These complexities include ever changing governmental policies and socioeconomic changes in the population. The most current policy changing hospitals payment system is the Affordable Health Care Act in an attempt to control health care spending. Before strategies can be developed to improve revenue cycle management, one must understand the background of the industry. While improvements to the revenue cycle are certain …show more content…

Demographic variants of the health care population include an aging population, declining birthrates, population migration and immigration, and epidemics. In 2010 life expectancy was 78.7 years, an increase of 11% since 1970 (Kaiser 2014). Furthermore the volume of chronic illnesses has increased in the United States. The leading chronic diseases and conditions include heart disease, stroke, cancer, diabetes, and obesity. The rate of obesity fueled by unhealthy diets and inadequate physical activity has rippled through the population leading to secondary chronic diseases. Chronic obesity has more than doubled in the adult population over past twenty years and more than tripled in children between ages of 12 and 19. According to the Centers for Disease Control and Prevention, approximately 86 percent of United States health care spending was for treatment of chronic diseases. The socioeconomic fluctuations and the recent political rulings only increase the health care …show more content…

Of the almost three trillion spent in health care annually, $400 billion goes towards processing claims process or bad debt write offs partially because of outdated or inefficient processes (McKinsey). Health care organizations can fail to realize as much as 3 to 5 percent in net revenue due to a lack of effective internal controls and failure to migrate financial, regulatory, and operational risks (Berger 2008). As we now know, hospitals struggle to improve these deficiencies given the constantly fluctuating health policies and demographics of the population, on top of contractual barriers, and regulations. Performance of the process has become increasingly paramount task and most organizations are currently evaluating three process improvement categories. Popular options or investments include, workflow restructuring, enhanced business intelligence, or simply outsourcing. Nonetheless, amongst the revolution in the health care industry, revenue cycle management performance improvements are necessary for hospitals to maintain positive financial welfare. Revenue cycle management is the administrative process of generating a bill and eventually receiving payment for goods and services. While all industries utilize some type of revenue cycle management, the process is vastly more complex in the health care

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