Revenue Cycle Performance: 5 Advanced Tactics to Improve Healthcare RCM

When Radiology Imaging Associates, a group with 8 imaging centers across Florida, turned to their billing company for underpayment recovery, they didn’t get the improved revenue cycle performance they had expected. 

Revenue cycle performance depends on revenue optimization, a critical piece of which is underpayment recovery. When payers pay less than what’s stipulated in their contracts, providers are well within their rights to go after them. 

One of RIA’s sore spots with their biller was insufficient underpayment identification. 

Accurate underpayment detection takes either an on-the-ball RCM staff member or contract management software that centralizes and digitizes payer contracts. When a payment comes into the healthcare organization, both compare the amount sent by the payer to the amount agreed to in the contract, but automation does it automatically, listing all underpayments in a report or dashboard. With a manual approach, a staff member goes through a multitude of spreadsheets, payment by payment. 

While RIA’s biller had some underpayment identification capacity, its technology and staff couldn’t manage the level of complexity appearing in RIA’s (indeed all of today’s) contracts well enough to get the revenue its radiologists had earned. With up to 1,000 stipulations and unique legal language in each, what contract isn’t confoundingly complex these days? 

To get their underpayments accurately addressed and identified, RIA turned to software that had been built from the ground up to analyze payments and contracts, including the most complex contract any insurer could muster. 

The software uncovered that one payer misinterpreted a nuance in its managed care agreement. It tallied $1.1 million owed to RIA from a single payer. RIA continues to use the software to find similar underpayments across its payer landscape. Its revenue cycle performance depends on it.   

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

In this article, you’ll review how you can improve revenue cycle performance using, not only accurate underpayments and contract management software, but 8 more of the most advanced techniques. 

What is revenue cycle performance?

Revenue cycle performance is the analysis of a healthcare organization's financial processes, from patient registration to final payment collection. It measures how well an organization manages collections from payers and patients, denials, underpayments, charge capture, and contract negotiation. 

Revenue cycle performance is an indicator of the organization's overall financial health. Many RCM metrics can indicate trouble with the organization's finances and operations. Private equity firms, potential partners, and banks evaluate revenue cycle performance closely, scrutinizing metrics to determine whether the organization is running efficiently with a minimum of waste.

These entities know that it takes a potent revenue cycle system to reach the right insights for strategic planning and process improvement.

In addition to buyers and investors, the organization’s CFOs and revenue cycle leaders use RCM performance metrics to assess team and staff performance. Further, insurance companies and government payers may assess an organization's revenue cycle performance to ensure proper claims submission and processing. 

By improving revenue cycle performance, healthcare organizations can improve their financial outcomes, streamline operations, and ultimately enhance their ability to provide quality patient care. 

5 advanced tactics to bolster revenue cycle performance

1. Advanced technology  

The integration of artificial intelligence, machine learning (a type of AI) and automation in revenue cycle management is a game-changer for healthcare organizations. Research reveals that the great digital transformation of healthcare is underway. 

At this time, 90% of the 200 global healthcare executives surveyed by McKinsey & Company rank digital and AI transformation as a top priority for their organization. 

Bain & Company’s 2024 Healthcare IT spending survey of providers and payers reveals that 75% increased their IT investments over the last year. The consulting firm expects this trend to continue, calling this shift, “the digital transformation imperative, an inescapable future for all. It warns that “nimbler insurgents” that streamline and optimize via technology will move into higher margin services, displacing slow-to-adopt competitors. The latter will be left only with the most burdensome and cost-intensive core treatments.  

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More broadly, over a dozen experts shared their visions for the coming year’s technological advances with Health IT Answers. They agree that complete automation in RCM services should become a reality by 2025. 

They report that the digital revolution is transforming patient care into a more anticipatory, tailored, faster, and streamlined experience. These advances will streamline operations, reduce errors, and improve overall financial performance.  

Digital technology critical to improving revenue cycle performance

Traditional AI – combinations of machine learning (ML), optical character recognition (OCR), natural language processing (NLP) and robotic process automation (RPA) – verifies patient eligibility, accelerates and streamlines prior authorizations, fills schedules, enhances coding accuracy, automates claims processing, manages denials and analyzes the revenue cycle. 

Healthcare leaders are prioritizing digital transformation because its potential to improve operations and revenue cycle performance is documented.  Most healthcare organizations have RCM automation in place that handles some or many of these tasks. Their efforts are paying off.

• Deloitte's “Global Intelligent Automation” survey found that executives reported an average cost reduction of 32% from automation initiatives.
• A Black Book survey of healthcare financial professionals revealed that those implementing revenue cycle automation software experienced a 27% decrease in cost-to-collect and a 6% increase in net patient revenue.
• The National Association of Healthcare Revenue Integrity's most recent State of the Revenue Integrity Industry Survey showed that 70% of respondents claimed automating revenue cycle processes had a positive impact on their revenue. 

These findings underscore the substantial cost savings and revenue improvements that healthcare organizations can achieve through strategic implementation of AI and automation technologies in their revenue cycle operations.

Generative AI – which creates new assets and handles work once only trusted to humans –  uses note-reading and voice recognition to improve the speed and accuracy of physician’s notes. It also handles some sophisticated health records processing for Epic, and drafts preauthorization and appeal letters for Doximity. The AHA shares that engineers are hard at work getting Generative AI to prevent avoidable errors by analyzing extensive documentation for missing information or potential mistakes. This use case would help optimize coding and other processes. However, the AHA warns that this technology is not used widely as yet.

Healthcare leaders are prioritizing digital transformation because its potential to improve operations and revenue cycle performance is documented.  

How AI-driven digital transformation improves revenue cycle performance

Healthcare organizations stand to cut millions in costs and reap millions more in revenue when they unleash automation, AI, and machine learning. Use it to:

• Avoid new staff hires - AI and automation handle much of the tedious, repetitive work that burdens staff. Further, as contracts become more complex and providers recognize the need to scrutinize them, providers will have to undertake that work. Software shoulders much of it. When after the No Surprises Act the federal government told one women’s health physician group that they would need to provide good faith estimates (GFEs) to all patients who paid upfront or face compliance breaches, administrators sought an affordable solution. With 445 patients needing GFEs every day, they would need at least four and possibly eight new staff members to examine patient treatment plans and payer contracts and then generate the good faith estimate letter. Their budget couldn’t accommodate those hires. When the group began using GFE software to examine contracts, generate estimates, and send letters, it saved a possible $344,000 in annual labor costs. 

• Achieve efficiency -  advanced automation technologies streamline billing processes, reducing manual interventions and accelerating payment cycles. Where traditional billing might take 90 days, AI-powered systems can process payments in as little as 40 days, creating substantial operational efficiencies and reducing labor costs. Efficiencies impress buyers, investors, and lenders. 

• Fuel better decisions with accurate data - Sophisticated predictive data analytics powered by machine learning enables healthcare leaders to make accurate decisions that improve revenue cycle performance. Unprecedented, immediate visibility into operational performance helps RCM leaders identify and prevent inefficiencies as they occur, optimize processes, and stop insufficient or error-filled claims from going out. The best RCM software offers real-time visibility, a feature that establishes a system of continuous improvement and strategic decision-making that directly impacts financial performance.Advanced technologies help healthcare organizations minimize revenue leakage, improve collection rates, and identify previously overlooked revenue opportunities. By implementing intelligent systems, providers can achieve more predictable and robust financial outcomes while maintaining high-quality patient care.

• Patient Experience - Modern digital transformation strategies prioritize patient experience within revenue cycle management. By implementing more transparent, accurate, and user-friendly billing processes, healthcare organizations can improve patient satisfaction. Streamlined registration, clear communication, and simplified payment systems reduce patient frustration and create more positive interactions with healthcare financial services.Further, AI-driven automation promotes seamless exchange of patient information and coordination of care across disparate systems and healthcare settings, reducing medical errors and ensuring continuity of care. Satisfied patients raise the organization’s reputation and, via word of mouth and even social sharing, bring more patients to your door.  

By embracing the digital transformation rolling out via AI and automation, healthcare organizations can overcome current challenges, improve care quality, and ensure long-term sustainability in an evolving healthcare landscape.

2. Data analytics & revenue cycle performance

Big data and advanced analytics are emerging as crucial tools for optimizing RCM performance. Improvements to data interoperability mentioned above will bring increased adoption of data analytics with it. Despite the insights it can render, just 41% of healthcare organizations have implemented big data, according to Accenture. 

That figure is slated to grow, however. 

Fortune Business Insights puts global big data analytics market growth at a CAGR of 13.0%, with the market expanding from $348.21 billion in 2024 to $924.39 billion by 2032. 

Because health professionals deal with massive amounts of data, strong data processing and analysis tools are a necessity for revenue cycle performance optimization. Big data analytics will significantly improve revenue cycle performance for healthcare organizations in several ways:

• Enhanced claim management: Analytics can identify patterns in claim denials, allowing providers to address root causes and reduce denials by 20-30%. This leads to faster reimbursements and improved cash flow.
•  Improved patient financial assessment: Data analytics enables better evaluation of patients' payment behavior, helping to identify those likely to pay late or not at all. This insight allows for more targeted collection strategies and optimized revenue management.
• Streamlined billing processes: By pinpointing coding errors and unusual billing patterns, analytics helps in proactive detection and correction of inaccuracies, leading to more efficient interactions with insurers and improved financial performance.
• Predictive analytics for resource allocation: Healthcare organizations can use predictive analytics to anticipate future admission rates, optimize staff scheduling, and allocate resources more efficiently.
• AI-driven insights: Leveraging AI-driven analytics can enhance accuracy, reduce costs, and optimize revenue collection by analyzing large datasets to generate actionable insights.
• Increased clean claim rates: Data-driven organizations have reported improvements in clean claim rates by 10-15%, resulting in fewer denials and faster reimbursement[3].
• Operational efficiency: Analytics helps identify inefficiencies in the revenue cycle, allowing organizations to optimize processes, reduce operational costs, and increase profitability.
• Improved patient satisfaction: By enhancing the accuracy of billing and providing transparent pricing, analytics contributes to a better patient financial experience, potentially leading to increased patient loyalty and steady revenue streams. 

By implementing these data-driven strategies, healthcare organizations can transform their revenue cycle management, leading to improved financial health and operational efficiency.

3. RCM interoperability & revenue cycle performance

Another positive step healthcare organizations are embracing to achieve better revenue cycle performance is insisting on RCM software and data interoperability. 

Interoperable systems reduce errors in billing and coding processes, leading to fewer claim denials and faster reimbursements. This improved accuracy can significantly impact an organization's bottom line. Interoperability helps lower administrative costs, which account for about 25% of U.S. healthcare spending. 

Still, RCM system interoperability isn’t quite to the level EHR interoperability has achieved. After the rollout of government-backed interoperability initiatives like TEFCA, EHR systems companies worked hard to engineer their products to communicate across different healthcare providers and platforms. While they haven’t quite reached full interoperability, many leaders believe that with help from AI, 2025 could be a pivotal year. Patients and providers have been demanding a smoother care journey for years now, and interoperability is key to achieving this goal. 

Interoperability is moving to the revenue cycle ecosystem as well, driving toward seamless data exchange between various revenue cycle systems. Healthcare organizations often utilize several RCM software solutions. In addition, RCM solutions must interact with EHRs, PM systems, billing systems, health information exchanges, and more. The task RCM software vendors face is enormous but critical and inescapable. There are just too many benefits RCM system interoperability provides. 

For instance, interoperability improves billing accuracy, reduces claims denials, and identifies underpayments in real time. It also streamlines clinical and financial data. Further, enhanced data-sharing capabilities support improved compliance with regulatory requirements and enable more robust financial analytics. 

Healthcare associations and even software solution providers are making concerted efforts to integrate RCM systems with EHRs and other healthcare IT systems. While government legislation has not yet targeted RCM solution providers, its EHR initiatives are indirectly pushing the healthcare industry towards more integrated solutions. The 21st Century Cures Act – with its mandate of standards like HL7/FHIR for universal data exchange – impacts RCM workflows. The accurate, real-time patient record management and streamlined billing processes this legislation has prioritized mean RCM software companies must work toward achieving these goals. 

For now, RCM solution providers are executing integration via Application Programming Interfaces (APIs), which facilitate real-time information exchange between different organizations and EHR systems. These efforts are gradually improving RCM interoperability. While progress is evident, the goal of fully integrated and interoperable RCM systems remains a work in progress. Still, most likely it will be here before you know it. When evaluating revenue cycle performance software, insist upon the most modern interoperability functions. 

4. Contract management systems & revenue cycle performance

For too long, providers have been letting payers write the contracts, setting the fees and terms.

A recent MGMA survey reveals that one-third of providers neglect to review their contracts annually. More specifically:

•  17% of providers admit to never reviewing their contracts
• 16% only review contracts every 2 to 3 years or less frequently

We've encountered even more extreme cases. Some clients have presented us with wrinkled hard copies of contracts retrieved from file cabinets that had remained untouched for five years or more. This lack of regular contract review has significant implications for a healthcare organization's revenue cycle performance.

A robust healthcare contract management program is considered an advanced tactic because so many providers fail to use one and yet, those that do recover significant revenue. In fact, healthcare organizations intent on modernization are turning to contract management systems – either in-house, outsourced to a third party, or via payer contract management software – to boost revenue cycle performance. 

Contract management systems measure contract performance. Providers use it to evaluate the competitiveness of payer agreements against industry benchmarks and other payers. With leverage over a poor-performing contract, you can negotiate for better rates and fees, improving revenue. 

Some healthcare organizations have finally stepped up to payer revenue retention tactics. In a spate of lawsuits, healthcare organizations have recouped big sums. TeamHealth ($10 million win), and Envision Health ($92 million) convinced judges that UnitedHealthGroup underpaid them. One of our clients used our robust contract management solution to identify the $10 million they were owed. It takes meticulous contract management 

5. Patient-centric revenue cycle strategy

Focusing their revenue cycle performance efforts on operations, an RCM staffing shortage, and denials management, most healthcare leaders don’t consider how by making their revenue cycle more patient-centric, they can enjoy lower costs and more revenue. Still, forward-thinking organizations that are taking steps to improve the patient’s financial journey are reaping rewards. 

First, just what is a patient-centered revenue cycle? It prioritizes:

• Transparent pricing
• Upfront estimates
• Simple billing statements
• Flexible payment options
• Payment plans 
• Digital patient portals

This approach enhances revenue cycle performance in several ways:

• Increased collection rates: By providing transparent pricing, clear cost estimates, and simplified billing statements, patients are more likely to understand and fulfill their financial obligations. This clarity reduces confusion and increases the likelihood of timely payments.
• Reduced bad debt: Offering flexible payment options and payment plans makes it easier for patients to manage their healthcare costs, decreasing the chances of unpaid bills and reducing bad debt for healthcare organizations.
• Improved patient satisfaction: A transparent and patient-friendly financial process builds trust and enhances overall patient satisfaction. Satisfied patients are more likely to return for future care and recommend the healthcare provider to others, contributing to higher patient volume and better organizational reputation. 
• Streamlined billing processes: Patient-centric RCM often involves implementing user-friendly payment interfaces and online platforms, which can accelerate payment cycles and improve operational efficiency.
• Enhanced patient loyalty: When patients have a positive, reasonable financial experience, they are more likely to return for future treatments, fostering patient loyalty and ensuring a steady revenue stream.
• Reduced administrative costs: Clear communication and proactive financial counseling can minimize time-consuming billing inquiries and disputes, potentially lowering administrative expenses.

By adopting a patient-centric approach to revenue cycle management, healthcare organizations can create a more efficient, transparent, and satisfying financial experience for patients. This not only improves immediate financial outcomes but also contributes to long-term financial health and sustainability.

Use contract management software to escalate revenue cycle performance

The landscape of revenue cycle management is rapidly evolving, driven by technological advancements and a shift towards patient-centric care. Healthcare organizations that adapt to these changes and implement strategic optimizations will be well-positioned for financial success. More, those that can demonstrate vigorous revenue cycle performance gain an edge when competing for buyers, investors, and lenders. Creating implementation plans for these advanced tactics now will position you for growth over the coming years. 

RevFind, a contract management solution by MD Clarity, thoroughly assesses contract performance. You enter contract negotiations armed with valuable insights for more favorable rates and terms.  RevFind also features advanced revenue modeling capabilities that empower managed care contracting teams to make data-driven decisions. This functionality enables you to assess the financial implications of proposed rate adjustment and run  your own simulations with various scenarios. This data reveals how changes will impact revenue. 

With these modeling tools, providers no longer need to rely solely on payer assertions. They can independently analyze the true impact of even small rate changes, such as a 1% adjustment. 

Get a demo to see how RevFind can help you improve revenue cycle performance via streamlined, user-friendly contract management. 

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