In the modern healthcare system, many financial and organizational processes define the quality of care and satisfaction of all stakeholders, including the medical staff and patients. The success of a hospital may be evaluated by assessing its revenues which usually come from patients’ out-of-pocket payments, private insurance companies and their reimbursements, and government billing. Revenue cycle management is a financial process in health care that includes all transactions necessary to cover all caring elements starting from registration and ending with additional follow-ups. Billing and collections are the two primary steps in the revenue cycle that introduce vital patient data, payment liabilities, and points of care. If some billing or collections mistakes occur, incomplete or wrong information leads to unpredictable losses, high costs, care changes, and even physical harms that constrain hospitals’ revenues.
Hospitals’ revenues are thoroughly examined at the end of every year by creating financial reports and comparing the achievements of different facilities in the same area. Medical encounters between a healthcare provider and a patient have to be properly identified and explained, and the revenue cycle management process is applied to cover all the necessary transactions. Medical billing is a step to submit patients’ or health insurance companies’ claims and get paid for services. The creation of a unique and definite billing system reflects the work, services, and charges for care (Schaum, 2018). As soon as billing regulations fail or contain wrong information, there is a risk of losing large sums of money. Today, many patients prefer out-of-pocket expenses, and hospitals cannot put pressure on individuals when they prefer other healthcare facilities because of personal reasons. As a result, one billing mistake results in patient turnover and the inability to get maximum revenues (Medical Billers and Coders, 2019). The same errors provoke additional problems in a working process like service delays or the creation of poor informative background in a treatment process.
Patient collections is another step in the revenue cycle process when patient balances are determined, and payments are gathered. Not many individuals can pay for their care upfront, rising new deductibles and debts. To solve problems and answer questions concerning the quality of care, some hospitals create specialty registries to collect data (Schaum, 2018). However, poorly trained and unprepared staff cannot apply their properly, and patients continue refusing beforehand payment, questioning the financial stability of hospitals (Medical Billers and Coders, 2019). These mistakes constrain hospitals’ revenues by the necessity to work with negative margins and demonstrate low revenues every year. Incorrect patient information requires not only corrections but prevents the continuation of other care processes. Healthcare providers cannot copy information and use it in other medical records, additional time and resources are spent, and no space to enlarge revenues is observed.
In conclusion, understanding financial processes in the healthcare system are obligatory for many purposes. Revenue cycle management depends on the possibility to predict billing and collection mistakes because they constrain hospitals’ revenues financially and organizationally. If a mistake occurs, a patient could change a hospital without covering the work that has already been done, meaning that a hospital should lose money. When the time to solve a mistake comes, a hospital should hire an analytical team and get ready for additional money costs. Finally, the prediction of similar billing and collection mistakes requires training, which equals losses in time and money.
References
Medical Billers and Coders. (2019). Top 5 challenges with healthcare revenue cycle management. Medicalbillersandcoders.com.
Schaum, K. D. (2018). It takes a team to obtain reimbursement!Advances in Wound Care, 7(11), 349-353.