Revenue Cycle Efficiency: Achieve Productivity and Accuracy in Existing Operations

With two hospitals and 40 specialty and primary care clinics, Nebraska Medicine manages almost 31,000 discharges a year, 600,000 outpatient visits, and over 1 million clinic visits. 

Despite consistent growth, the health system struggles with the rising costs and resource shortages impacting all of healthcare. “We've grown over time, which is a good thing,” Jana Danielson, MS, FHFMA, executive director of revenue cycle at Nebraska Medicine, recently told Rev Cycle Intelligence, “but you can't grow from an expense standpoint above what you're bringing in from that growth.” 

Danielson stresses that to bring optimal value to patients and to the system, healthcare systems need to focus on revenue cycle efficiency. She led the initiative to streamline and standardize processes, a step that was critical to overcoming operational and financial challenges. She also implemented technology to support revenue cycle staff and processes. Still, technology is not the one and only path to revenue cycle efficiency. 

Revenue cycle teams are pushing for efficiency now more than ever due to a perfect storm of challenges facing the industry. A 2023 survey by MGMA found that over 70% of healthcare leaders cited revenue cycle efficiency as a top priority for their organizations.  

This article takes you through how to achieve revenue cycle efficiency at your organization. 

What is revenue cycle efficiency?

Revenue cycle efficiency is the improvement in speed and accuracy of existing revenue cycle operations. Its main objective is to reduce waste and minimize errors in financial, operational, and administrative processes. An efficient revenue cycle helps to minimize costs, enhance staff productivity, and streamline operations from patient registration through final payment. Achieving it also impresses investors and potential buyers.

Revenue cycle efficiency v. revenue cycle optimization

Revenue cycle optimization and revenue cycle efficiency are closely related concepts in healthcare financial management, but they have some differences. While revenue cycle optimization takes a comprehensive approach to improving overall financial performance, revenue cycle efficiency focuses on enhancing the speed, accuracy, and productivity of existing processes. Optimization may include some efficiency improvements, but its ultimate goal is maximizing revenue potential. 

The importance of revenue cycle efficiency

With the potential to drive financial health, patient care quality, and market competitiveness, revenue cycle efficiency is crucial for healthcare organizations.  Would you want more of these three qualities at your organization? 

Financial stability and sustainability

Efficient revenue cycle management is fundamental to the financial stability and long-term sustainability of healthcare organizations. It improves cash flow, reduces claim denials via proper coding and documentation practices, reduces days in accounts receivable, and reduces billing and collections labor costs.

Streamlined administrative processes also attract better clinical and administrative staff members as your system reduces paperwork so they can dedicate more time to patient care. The better people you employ, the more your reputation and patient volume will grow. 

Streamlined processes are not the only benefit of efficiency, however. Demonstrating smooth scheduling processes, accurate charge capture, timely prior authorization and claims all strengthen an organization's position in payer contract negotiation. When you make a demand, providers know that you have the data and strategy to back it up. They’re more likely to conclude that working with you beats trying to outmaneuver and overwhelm you, a common approach to dealing with a disorganized and poorly functioning entity. Keep in mind that, as the physician researchers writing in the International Open Access Journal of the American Society of Plastic Surgeons write:

 “Some payers ‘test the waters’ and routinely underpay, counting on the provider letting the money go.” 

Read more about payer tricks in our Underpayment Recovery For Medical Practices post.

Improved patient care quality

Better resource allocation translates into higher cash flow, allowing for investments in the advanced medical technologies and facilities your patient community needs. Better revenue also attracts high-quality clinicians, another patient-pleaser. 

Competitive advantage in the healthcare marketplace

When there are sharks in the water looking for investment opportunities and acquisition targets, an efficient revenue cycle can provide a competitive edge. Lower costs and better revenue boost a healthcare organization’s EBITDA to a higher multiple, a feature that attracts more and better offers. 

Should your organization wish to remain independent while expanding, however, optimized EBITDA on your financial statements also impresses lenders.  A physician group or practice looking for a loan to erect an onsite lab or expand marketing needs to demonstrate it has a history of winning a strong return on initiatives like these.

By prioritizing revenue cycle efficiency, healthcare organizations can ensure their financial health, enhance patient care quality, and maintain a competitive edge in an increasingly complex healthcare landscape.

How to achieve revenue cycle efficiency  

Before you think that revenue cycle efficiency is only about technology, take a step back. (We’ll get to technology below.) 

Integrate leadership 

Katy Ryan Michaud, VP of Revenue Cycle, at Franciscan Missionaries of Our Lady Health System explains in Health Tech that her organization needed to go beyond technology to shore up their revenue cycle. Relationships with IT were fraught, because, 

“Our requests for new features or enhancements often took months to be delivered, as they had to go through multiple layers of approval, testing, and deployment. This meant we were always lagging behind the industry standards and best practices, and missing out on opportunities to optimize our revenue cycle processes.

We often felt that our collaborating IT and Operations teams did not understand our goals, priorities, and pain points, and vice versa. There was a lack of trust and communication between the different disciplines, resulting in silos and conflicts. This made it challenging to coordinate our efforts and achieve our desired outcomes. We frequently encountered errors, bugs, and glitches that affected our workflows and productivity. We also had to deal with frequent system downtimes and maintenance issues that disrupted our operations and customer service.”

Given the dire situation, she was cleared to hire an IT analyst and an operations leader. The IT analyst identified inefficiencies and improved communication with the IT team. The operations manager tallied the needs and challenges of both sides and facilitated communication and alignment, resulting in smoother workflows and increased customer satisfaction. She also brought internal IT and operations leaders into revenue cycle team meetings.  

With root causes of issues brought into the light, the RCM team “achieved a level of collaboration and alignment that was unprecedented in our organization.” The integrated leadership model brought a “remarkable improvement” in revenue cycle efficiency, quality, productivity, creativity, and communication. 

Staff training

Continuously educating staff on best practices, coding updates, and regulatory changes can reduce errors and improve overall efficiency. A KPMG survey of  317 medium-to-large organizations found that 86% of high-performing organizations use training to improve employee productivity.

Process standardization 

Implementing standardized and documented workflows and procedures across all revenue cycle functions can reduce variability and increase consistency.

Use RCM efficiency KPIs 

Regularly tracking key performance indicators (KPIs) and comparing them to industry benchmarks can help identify areas for improvement. Efficient revenue cycles are measured and managed using these specific KPIs:

• Days in Accounts Receivable (AR): This metric measures the average number of days it takes to collect payment after services are rendered. According to HFMA, the industry benchmark for days in AR is 30-40 days.
•  Clean Claim Rate: This indicates the percentage of claims that are accepted on first submission without any errors. The industry standard is 95-98%.
• Denial Rate: This measures the percentage of claims denied by payers. While one survey of 535 hospitals found that private insurers deny 13.9% of all claims, revenue cycle experts urge healthcare organizations to get it under 5%.
• Collection Rate: This represents the percentage of billed charges that are actually collected. The industry benchmark is typically above 95% for contracted payers.

Streamline and standardize care documentation practices

Working with clinical staff to ensure complete and accurate documentation can reduce coding errors and claim denials.

Audit regularly

Conducting periodic internal audits of revenue cycle processes can help identify inefficiencies and compliance issues.

Empower staff

Encouraging staff to identify and suggest process improvements can lead to innovative solutions and increased engagement.  Sometimes, those closest to patient experiences and practice operations have keen efficiency insights.

Lean management principles

Apply Lean methodologies to eliminate waste and improve workflow efficiency in revenue cycle processes.

Payer relationships 

Building strong payer relationships can facilitate smoother claims processing and faster resolution of issues. At some points in your partnership, friendly collaboration could be your most effective strategy. Given payer delays and intransigence, however, you may have to resort to an aggressive approach. 

By implementing these non-technological strategies, revenue cycle leaders can significantly improve RCM efficiency and effectiveness, complementing any technological solutions they may also employ.

AI and automation are proving their power to achieve revenue cycle efficiency

As a revenue cycle executive, you probably hear pitches from RCM software companies regularly. We are in the midst of healthcare’s digital transformation, a shift from manual to automated operations, and software and other solution providers have created many products to support this shift. Healthcare has lagged behind the digital transformation in travel, hospitality, and retail, and patients are complaining. They want clarity and convenience, two features that slow manual processes haven't achieved. 

Most now accept that the shift to healthcare's operational shift to AI and automation is inevitable, and we believe it’s a good one. Not only did 85% of healthcare executives increase spending on technology last year, but there’s evidence that this technology is bringing much-needed improvements in efficiency and revenue. 

First, The Health Management Academy surveyed 50 of its member health systems on automation and AI in healthcare RCM. 

Respondents reported that efficiency was the biggest benefit of automation, noted by 91% of surveyed health systems that already use the technology. Further, 82% noted lower operational costs as a major benefit and 74% reported increased revenue capture. This group also put the perceived return on investment at 2.21. 

One surveyed health system revenue cycle VP shared:

“Have we been able to reduce staff at this point? No. Do I think at some point we will? Yes. The bigger piece is we haven’t needed to add staff as we grow.”

According to HFMA, by late 2023, 74% of revenue cycle leaders at US hospitals and health systems had automated some portion of their revenue cycle, a choice that won them increased productivity, lower cost-to-collect, and fewer claim denials and errors. 

Several surveys confirm that automation and AI are proving their usefulness. The 2023 National Association of Healthcare Revenue Integrity’s State of the Revenue Integrity Industry Survey revealed that 73% of respondents experienced positive revenue impacts from automating revenue cycle processes. A separate Black Book survey of 1,302 healthcare financial professionals found that implementing revenue cycle automation software led to a 27% decrease in cost-to-collect and a 6% increase in net patient revenue.

Additionally, a study by the Institute for Robotic Process Information and Artificial Intelligence, cited in a KPMG analysis, indicates that robotic process automation can result in 25-50% cost savings for healthcare organizations. Furthermore, a recent SalesForce survey of automation users showed that 79% reported increased productivity, while 89% experienced higher job satisfaction after implementing automation tools.

The digital transformation of healthcare's revenue cycle management is not just a trend, but a necessary evolution to meet the growing demands of the industry. As evidenced by the positive outcomes reported by health systems already utilizing automation and AI, the benefits of increased efficiency, lower operational costs, and improved revenue capture are substantial. While the transition may not immediately result in staff reductions, it positions healthcare organizations for scalable growth without proportional increases in workforce, ultimately leading to a more sustainable and efficient revenue cycle operation.

Today’s revenue cycle automation and AI make revenue cycle staff more productive and accurate by: 

• automating key tasks such as patient registration, eligibility verification, charge capture, and claims submission.
• integrating core healthcare IT systems for seamless data exchange and real-time updates.
• utilizing real-time analytics and reporting to track key performance indicators and make data-driven decisions
• carrying out repetitive, high-volume tasks, freeing up staff for more complex, value-adding activities.
• improving coding practices and documentation. 
• speeding claims and prior authorization filing to get reimbursements more quickly. 
• reducing days in accounts receivable.
• enhanced patient satisfaction through accurate, transparent billing and efficient claims processing. 
• managing payer contracts, recommending needed actions, and automating renewal alerts.
• automating underpayments identification.

Take a quick, self-guided tour through a powerful contract management and underpayments identification tool:

By achieving revenue cycle efficiency via automation and AI, healthcare organizations can improve their financial health, comply with regulatory requirements, and focus more resources on delivering high-quality patient care. 

The future of revenue cycle efficiency technology

Because technology is always advancing, it can be tough to decide when to leap in. You don’t want to adopt a new solution in its first iteration, but you also don’t want to miss out on revenue and efficiency enhancements. These features will most likely appear in revenue efficiency solutions in 2030. 

• Artificial intelligence and automation: AI and automation technologies are being integrated into various aspects of revenue cycle management, including medical coding, billing, claims processing, and denial management. This trend is expected to reduce errors, increase operational efficiency, and streamline workflows.
• Enhanced data analytics and predictive modeling:  Advanced analytics and predictive modeling are being used to forecast revenue streams, identify potential revenue threats, and allow for timely interventions to maintain financial stability. This enables data-driven decision-making and optimization of revenue cycles.
• Integration of telehealth services:  With the rise of telehealth, revenue cycle management systems need to adapt to accommodate virtual encounters, ensuring accurate billing and coding practices for remote healthcare visits.
• Enhanced patient financial experience: There's a growing emphasis on improving the patient financial experience through personalized payment plans, transparent billing practices, and digital tools for patient engagement. These changes will bring health care closer to the convenience offered by other industries (travel, retail, entertainment) today. 
• Blockchain technology adoption: Blockchain is being explored for its potential to enhance data integrity, security, and transparency in handling patient records and financial transactions.
• RCM services outsourcing: Healthcare organizations are increasingly outsourcing RCM functions to specialized vendors to address staffing shortages and access expert knowledge and technologies.
• Customizable RCM solutions: There's a trend towards tailored strategies that accommodate the unique requirements of various departments, services, and workflows within healthcare organizations .
• Automation of mid-cycle processes:  There's an increased focus on automating traditionally manual mid-cycle processes, such as coding and charge capture, to improve efficiency and reduce errors[6].

These trends highlight the industry's move towards more efficient, data-driven, and patient-centric revenue cycle management practices, with a strong emphasis on leveraging advanced technologies to optimize financial outcomes.

Achieve the peak in contract management efficiency with MD Clarity

In the coming years, investors, buyers, patients, and staff will demand efficiency at their healthcare organizations. Following these steps creates a foundation to optimize revenue and costs to collect for the future. 

Contract management and modeling is one area in the revenue cycle ripe for modernization by way of automation. MD Clarity's RevFind solution offers powerful automation capabilities to help healthcare providers maximize their revenue potential. By centralizing all payer contracts in one place, RevFind enables comprehensive analysis of payment data against contracted terms. The system automatically flags any discrepancies between actual payments received and expected reimbursements based on contract stipulations. By automating the tedious process of manually reviewing payments against contract terms, RevFind frees up staff time and improves overall productivity.

The system simplifies contract comparison and benchmarking, allowing providers to easily assess how their reimbursement rates stack up against industry standards like Medicare. This data-driven approach empowers more strategic and assertive payer negotiations.

Schedule a demo to see how RevFind brings your contract management process into the digital era. 

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