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Rethinking the Traditional Approach to Revenue Cycle Management

According to KaufmannHall’s 2018 CFO Outlook, healthcare finance executives say cost-reduction is the #1 most important performance management activity for 2018.

Recent analysis from Ernst & Young suggests that transforming the traditional model of revenue cycle management might help healthcare organizations reduce costs and adapt to the swirling economic and regulatory environment.

So what’s wrong with doing things the way your hospital or physician practice has always done them?

The problem, as we’ve noted before, is that patient payment responsibility has risen dramatically and research shows it continues to increase. According to TransUnion Healthcare, average out-of-pocket patient costs rose another 11% during 2017. As Jonathan Wiik, author of Healthcare Revolution: The Patient is the New Payer says, “Increasing healthcare costs and patient responsibility is a continuing trend that does not seem to be slowing anytime in the near future.”

Hospital systems have traditionally approached billing from the insurance standpoint rather than the patient. Billing platforms such as NextGen, Epic, McKesson, etc. have generally been designed to handle insurance payers and a handful of patient balances, NOT thousands of patient pay accounts. Even when healthcare organizations do attempt to engage with their patients, it tends to be in silos.

Let’s take this example of the victim of a car accident. She’s uninsured and was traveling out-of-state for business. After she gets great treatment at the hospital, is discharged, and then the confusion and frustration begins.


Multiple vendors & handoffs

Time & resource inefficiencies

Missed revenue opportunities

Significant compliance risk


Third Party Liability and Early Out
Workers Compensation and Eligibility
Denials and Medicaid


Confusion & Frustration

  • Provides the same information time and time again to multiple vendors
  • Becomes disengaged and slows down process
  • Makes payment when they shouldn’t

She could be eligible for auto insurance, workers’ compensation, disability, out-of-state programs, and more – so the hospital could be pursuing reimbursement from up to 15 different payers (including the patient!). All of the communications she receives – phone calls, letters, etc. – attempting to collect could be coming from multiple different vendors, insurance companies, and attorneys. The more complex the process becomes, the more frustrated the patient can get.

And since the hospital is also dealing with all of these multiple entities, the handoffs between them can create time and resource inefficiencies and greater compliance risk if payers are not pursued in the proper order (Medicaid is generally the payer of last resort – all other sources of coverage must be pursued first). In turn, that can result in missed revenue opportunities for the hospital.

That is the traditional way of approaching revenue cycle management.

But we wondered what would happen if you could connect these traditionally siloed services?

We conducted a 2017 annual performance study with existing clients across a broad range of provider types and found that just by linking all patient-facing financial programs together to identify all payer sources in the properly compliant order, hospitals could drastically reduce the inefficient and costly aspects of traditional revenue cycle management. Hospitals and health systems were able to simultaneously increase overall cost savings and patient satisfaction, in addition to capturing incremental revenue purely through combining best-in-class patient financial services into a single process.

So maybe it’s time rethink the traditional approach to revenue cycle management. Hospitals can reduce costs and make sure every patient, whether insured, under-insured, or uninsured, is able to receive the most appropriate coverage for their situation.

Download a copy of the 2017 Annual Performance Study below: