By Jonathan Farr

The competitive climate for hospitals is at a fever pitch, with mergers and acquisitions adding further complexities to the marketplace.

This is not a time for simply resting on past achievements or a reputation for touting service lines: astute leaders recognize that they must optimize every level of clinical, operational and financial performance in order to capture and retain market share and meet payer/employer demands for value-based care.



This is hardly a time to falter with the revenue cycle management process or risk claim denials that threaten the financial stability of the health care organization. Annual losses from denial write-offs can be as high as five percent. Too often, hospital leaders see up to 15 to 20 percent of initial denials with the first billing, and must rework or appeal one out of every five claims, leading to administrative costs and inefficiency.

These issues really impact not-for-profit hospitals, which struggle when the barrage of denials begins to strain limited resources. In fact, reworking denials can prevent these organizations from achieving success within their revenue cycle management, often to the extent of compromising the quality of care they deliver. For-profit institutions are not exempt from these problems, although the pressures to optimize RCM are ever-present.

Historically, finance and medical care have operated in silos as the natural order of the fee-for-service environment. Bundled payments, accountable care organizations and other reimbursement models, however, are changing this paradigm. Today, hospitals must strike a balance between the care provided by physicians and payer reimbursement.

While not-for-profit hospitals can learn from the for-profit sector and seek new opportunities for maximizing revenue and enhancing performance, for-profit institutions can always benefit from fresh approaches and innovations to optimize revenue cycle management.

Revenue cycle management in the real world
Let’s look at a real-world scenario in which a large not-for-profit hospital system located in a largely urban area in the southeast United States sought a Revenue Cycle Management auditing (RCM) solution to effectively address challenges related to denials management, appeals and Medicare local market rules.

The overall goal was to ensure clinical and operational excellence while supporting the financial viability of the organization. The hospital had undergone significant expansion over the past few years, bringing massive sets of disparate data to be reconciled and reviewed, and adding significant complexity to RCM processes throughout the enterprise.

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