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Revenue-cycle Management

Where revenue-cycle management goes wrong

Increased profi ts, streamlined operations and a strengthened fi nancial position are all benefi ts of the right type of RCM implementation.

By Chittaranjan Mallipeddi

successful revenue-cycle management (RCM) program creates opportunities for healthcare providers to increase profi ts, streamline oper- ations and strengthen the fi nancial backbone of their practice or institution. RCM implementations also provide opportunities for things to “go wrong.” When not addressed, certain obstacles can impact the level of adoption, effi cacy and fi nancial impact. By taking into account the most-common problem areas, healthcare providers can increase their chances of a successful program.


accounts from colleagues who share the value of their own revenue-management programs. Regardless of why the decision is made to move ahead and make a change, the fi nancial implications of improved revenue fl ow are nothing to take lightly. For example, in a recent revenue analysis, a mid-sized practice in Texas was losing nearly $300,000 annually based on payer mix, open claims and denial reports. Even small practices like this one are vulnerable to hundreds of thousands of dollars in lost revenue, and as the size of the institution increases, so does the scale of potential lost profi ts. With so much at stake, planning ahead to address what factors may impact a success- ful implementation becomes critical. This examination can be most helpful when bro- ken down into the three main points through which revenue moves: payers, providers and patients. For any provider to drive a successful RCM implementation, they need three things in place. First, negotiating good contracts with payers is critical. Every year, providers in the same ZIP code are providing exactly the same service, with one getting paid more than twice the amount – solely based on the strength of the current contract. Because these contracts will drive overall profi tability, having healthy contracts in place is essential before moving forward with an implementation.

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Second are solid and consistent business processes. Changes to the revenue cycle are top-down initiatives, and executive sponsor-

A healthcare provider may decide to implement RCM for any number of reasons. For instance, the organiza- tion could be facing fi nancial problems. Many times, a current billing vendor just disappears, leaving providers to scramble to keep operations running. Other times, RCM implementation may occur based on fi rst-hand

24 April 2010

ship is a key. The entire team should work cohesively and be held accountable to the new standards and processes that have been put in place. Consistency in forms and templates is also critical. Before initiating a program, each form needs to be examined, and a standard template needs to be created.

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