Collecting payments from clients can be very daunting because business service providers have to determine which customer owes what by analyzing and sorting through tonnes of data. The process includes scheduling appointments, navigating business codes, managing insurance disputes, and providing personalized customer care. It all happens before the business receives a complete payment for its services. That takes time.
Still, businesses need to maintain detailed transaction records on all customer accounts. That’s where revenue cycle management comes in. It incorporates all the activities and tasks involved in getting the client from their point of registration to completing payments and service reception.
Why is Revenue Cycle Management Important?
Different businesses across the many industries may use other protocols in their revenue cycle, determined by their method of operation. Still, the overall goal of revenue cycle management remains the same. It starts with the provision of a proposed service or product and ends with an invoice, paid in full. Therefore, streamlining the processes involved in your revenue cycle can establish a consistent cash flow.
The 5 Crucial Steps of a Successful Revenue Cycle
The revenue cycle starts when a client walks in or contact is initiated and ends when the full payment getting made and the service is delivered. The following checks happen before completion:
- Eligibility Checking: For instance, in a healthcare scenario, the service provider first checks the patient’s insurance eligibility before beginning care. They need to verify payment capability.
The verification process starts when the patient books an appointment but completes before the set date. The procedure uses automation for increased processing and efficiency.
- Claim Management: Service providers often send client claims to insurance providers using online portals. Different providers have different applications with various outlets, which requires coding and API management.
Revenue cycle automation bots can run user interfaces to automate claims submission across multiple client portals.
- Coding: To ensure that applications integrate and the correct data gets interpreted, service providers using revenue cycle management need to use valid API codes to assign products and services to applications and streamline claims control.
Automating business processes using codes and API application management can bring tremendous financial benefits.
- Dispute Management Guidelines: Not all claims are claimable. Insurance providers can reject specific claims outrightly. That necessitates rules and guidelines for individuals to resolve disputes without destroying the revenue cycle.
- Reconciliation Management: When claims get approved, the insurance provider or party responsible for payment transfers the funds to the business provider’s account. RCM enables automated payment reconciliation within financial systems.
Thankfully, you can automate every step in the revenue cycle management process. End-to-end coding allows businesses to combine revenue process automation bots with business management capabilities for full automation.
Business applications collect data using integrated reporting tools that provide real-time visibility. You can build a workflow map, assign tasks to different users, and track completion.
Automation has contributed significantly to powerful improvements across service industries like healthcare by optimizing processes.
Real World Applications of Revenue Cycle Management
Thanks to ongoing technological innovations, many renowned revenue management and automation technologies significantly improve core business processes while
Real-world Examples of Revenue Cycle Management include:
1. Healthcare Revenue Cycle Management: In some industries like healthcare services, revenue cycle management processes may be more sophisticated. Patients receive various benefits from health care centers. Therefore the RCM process requires a charge capture mechanism to translate services into payable fees. It requires coding.
Consider this, an office visit is a service and may attract a fee. If you undergo some tests as a patient, the process gets recorded, and third-party services like insurance can use it to serve their clients efficiently. It facilitates the timely submission of payment claims and allows the customer to settle charges in real-time.
The healthcare revenue cycle ends with the receipt of payment and delivery of the specified service.
2. Revenue Cycle Management for Trade and Retail Services: Businesses that offer trade services, including retail stores, can skip some of the transactions required for a manufacturing revenue cycle.
For instance, a plumbing business requires clients to complete payment before they leave the worksite. The revenue cycle may include an invoice and a receipt, recording client payments in the business’s books.
3. RCM For Barbershops or hairdressers: Saloons and beauty shops may also have a simple revenue cycle, which may not require an invoice cycle. They typically have standard prices for specific services. The client pays for these services before leaving the shop, and that’s it for the revenue cycle.
4. Online Marketing: We can consider modern marketing businesses with a secure online presence that operate a Website to sell advertising space. The process of delivering services to clients involves multiple distinct steps across the revenue cycle flowchart.
The service provider completes credit checks before engaging clients. The credit check happens simultaneously if the advertiser comes to the agency with a proposal for ad space.
If eligible, the provider makes the client sign a contractual agreement covering ad insertions, scheduling, and payment management.
The revenue cycle completes once the payment gets processed.
5. Revenue Cycle in Manufacturing: When looking at manufacturing businesses, a revenue cycle starts with the final product.
For instance, consider SaaS businesses and how they build applications and make widgets that get promoted using a sales management team. A salesperson contacts prospects to create a profitable inventory and updates business records whenever there is an order.
On a larger scale, the credit extends as sales orders get made. Afterward, the orders go to the packaging and shipping facilities in preparation for delivery. Then, the sales order, packaging, and delivery records get transferred to accounts, and an invoiced.
The revenue cycle completes once payments get made.
The Key Challenges of Revenue Cycle Management
The revenue cycle management process includes front and back-office activities involving at least three parties: the service provider, the client, and the payer.
The entire process involves a lot of data transfers and transactions between the parties (sometimes it includes government regulators). Dealing with all the documentation and steps can be very time-consuming.
The three primary challenges of revenue cycle management include:
· Revenue Cycle Data Accessibility: In industries like healthcare, the decision-makers need to make effective decisions on the go. Making the right decision requires a deeper understanding of multitudes of data reports. However, the challenge comes with ensuring that the correct data is available.
· Analytics Team Dependency: Decentralized analytics can distort decision-making. It can cause delays when decision-makers wait for reports from other business intelligence departments and account managers.
· Report Development Time: Generating reports that allow business leaders to make effective decisions may take time, as you have to wait for updated data from relevant applications. It takes time to update existing reports.
How Can I Manage My Revenue Cycles Effectively?
· Use AI: Artificial intelligence allows you to highlight and identify the reasons for incoming claims or denials. It streamlines re-submissions and minimizes reimbursement challenges.
AI helps businesses reduce costs by optimizing work processes and functions such as registration, scheduling, billing, charge capture, and collections.
· RPA: Robotics Process Automation allows businesses to improve the revenue cycle by using bots to automate and manage manual work processes.
For industries like healthcare, revenue cycle management gets simplified by allowing providers to automate billing, coding, charting, and scheduling.
· Manage Your Analytics: Every business should empower employees to use their entire data potential and reduce operational dependency on analytics departments.
You can build an effective analytics service for your business by:
1. Building a data-centric organizational
2. Increase team member literacy regarding data management
3. Implement secure data governance protocols
What are the Advantages of Optimized Revenue Cycle Management?
Many businesses can benefit from having an effective revenue cycle management process. In this case, we’ll use healthcare revenue cycle management as an example:
What is Revenue Cycle Management in Healthcare?
RCM in healthcare practice entails the process used to record and track revenue generated from patients as they receive various services. The cycle opens when a patient first makes an initial appointment with service and closes when they balance the payments with the facility.
The benefits of an effective healthcare RCM include:
· Streamlined Revenue Collection: Revenue cycle management in healthcare allows service providers to track and collect payments at each step of the patient treatment. Business owners can quickly highlight trends and improve claims and denial management, including ensuring timely reimbursements.
· Service Quality Improvement: RCM applications reduce the number of resources needed to fix untimely errors and appeal for denials and claims. It allows providers to focus on delivering quality care and value-based service provision.
· Improved Customer Experience: RCM enables the automation and smooth management of redundant processes such as scheduling, auto-filling forms, and billing management. It significantly enhances client and staff user experiences.
· Free Administrative Resources: Revenue cycle management increases administrative efficiency by streamlining redundant tasks, allowing staff to focus on facing clients, and building personalized relationships.
Revenue cycle management services help businesses establish accurate data records and eliminate misrepresenting revenue reports. It makes it easy to audit client logs and accounts receivable.
RCM helps business development teams test and optimize sales processes. You can code through registration, billing, and insurance claims management.
It also limits channels for fraud.