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Revenue Cycle Inefficiencies Are a Common Source of Leakage

Much of the world remains firmly in the clutches of the COVID-19 pandemic and its pervasive economic disruption. The healthcare industry has been among those that have been hardest hit, with the American Hospital Association (AHA) projecting total COVID-related losses to hospitals and health systems in 2020 due to the reduction in inpatient and outpatient volumes to exceed $323 billion.

A report from Kaufman Hall takes another look at the impact of the pandemic on the state of healthcare according to a survey of hospital executives and finance leaders. Respondents were asked to indicate all revenue cycle areas where they’d seen an impact since the beginning of the pandemic, and a significant number of them reported seeing increases in several areas:

  • Increases in bad debt and uncompensated care, 48%
  • Higher percentage of uninsured or self-pay patients, 44%
  • Higher percentage of Medicaid patients, 41%
  • Lower percentage of commercially insured patients, 38%
  • Increased rate of denials, 23%
  • Other, 13%


The financial effects are likely to last long after the virus has been controlled, which is not an ideal outlook for an industry that already has seen declines for years. Harvard Business Review indicated that “since the beginning of 2016, the financial performance of hospitals and health systems in the United States has significantly worsened,” and that was before COVID-19 hit.

Things also have been increasingly challenging for patients, who have been bearing a much larger portion of the financial burden, thanks in part to the proliferation of high-deductible health plans. A report from the Kaiser Family Foundation reveals that from 2006-2016, the average out-of-pocket costs for patients rose 54%. In that same time period, patient payments toward deductibles increased 176%.

Explore New Ways to Capture All Revenue

As bleak as things appear, there are ways hospitals and health systems can stanch the financial bleeding. They’ll need to seriously evaluate where revenue leakage is occurring within their organization. For example, Healthcare Finance reports that revenue cycle inefficiencies and poor communication around patient financial responsibility are common causes of revenue leakage.

This could be a larger problem than some organizations realize. The nonprofit Council for Affordable Quality Healthcare reported in 2019 that $350 billion is spent annually on healthcare administrative complexity.

Once potential leakage targets have been identified, revenue cycle leaders also need to be open to exploring new ways to capture all earned revenue, including outsourcing to an experienced partner. A vendor who has managed to successfully navigate the COVID-19 pandemic and has been through the ups and downs of the healthcare industry through the years can help hospitals and health systems resolve claims and improve cash flow even in the toughest times.

Experienced Outsourcing Partner Can Complement Internal Teams

Here are a few things revenue cycle leaders should consider when looking for a vendor to help identify and prevent revenue leakage, now and in a post-COVID world:

  • Nationwide resources with a local presence and experience.
  • Long history of business concentration on healthcare.
  • Consistent monitoring of federal and state regulatory updates.
  • Remote staffing capability with optional on-site representatives.
  • Virtual technology for file transfers, screening, electronic signatures, patient engagement, and more.
  • Full complement of revenue cycle management services for complete follow-up and resolution across all areas of need.

MedData has been a trusted RCM services provider for more than 40 years. We’re proud of how we’ve adapted to the challenges of COVID-19 to ensure we can continue to fulfill our commitment to our clients’ patients with optimal performance standards for as long as it takes, while the world resists, repels, and recovers from the outbreak’s disruption. We also have earned Healthcare Financial Management Association Peer Reviewed status and have been highlighted by HFMA for helping “organizations navigate the biggest challenges in healthcare.”

Additional Resources

  • “Referral Process Going Digital as Healthcare Providers Look to Stem Revenue Leakage,” Healthcare Finance, 2019
  • “How U.S. Hospitals and Health Systems Can Reverse Their Sliding Financial Performance,” Harvard Business Review, 2017