In this ultimate guide to revenue cycle management (RCM), CORE covers everything from the basics to get you started to the strategies and solutions that help you overcome RCM challenges and their resulting consequences.
Table of Contents
- Revenue Cycle Management Definition
- The Purposes of Revenue Management
- 4 Revenue Cycle Management Benefits
- 4 Steps in the Revenue Cycle Management Process
- 6 Revenue Cycle Management Challenges (and Their Consequences)
- 3 Revenue Management Strategies
- Learn More
Revenue Cycle Management Definition
Revenue cycle management is an institution-wide financial process that enables organizations to identify, track, collect, and manage incoming payments for services provided. The RCM process plays an essential role in maintaining financial viability and providing exceptional service.
In addition to simply streamlining secure billing and payments, RCM can promote citizen, patient, and student engagement by strengthening relationships that build a better sense of community and commitment.
The Purpose of Revenue Management
Specifically speaking, the purpose of revenue management is to:
- Connect systems and data.
- Manage collection, revenue, and reconciliation.
- Communicate with and engage consumers.
When these CORE solutions come together in one system, they form a comprehensive picture of an institution’s revenue and financial status—which is the ultimate purpose of revenue management.
4 Revenue Cycle Management Benefits
Revenue cycle management brings many benefits to organizations: fast and error-free payments/reconciliations, deep insights into contextual data, and better service to users.
Here’s more about revenue cycle management benefits:
- Integrating multiple systems:
- Consolidates data into one accessible, real-time view
- Eases multi-departmental revenue collections
- Gives insights on payment experiences
- Automating processes such as sending invoices, processing payments, messaging users, performing reconciliations, and putting together reports:
- Eliminates frustrating and costly entry errors
- Significantly reduces the time departments spend performing manual tasks
- Knowing the quality and accuracy of finances, whether merchant services are currently working well, and how customer interactions are going will:
- Collect revenue quicker
- Give real-time, comprehensive, and meaningful understanding of data
- Allow you to give better service to your customers
- Keeping your organization compliant with the highest security and PCI standards and privacy requirements:
- Protects personal and financial information from unauthorized access
- Keeps your organization free from fees and fines
- Maintains your good brand reputation
4 Steps in the Revenue Cycle Management Process
The exact steps in the revenue cycle management process vary depending on the industry (government, healthcare, or higher education), but the general steps are as follows:
Step 1: Information Capture
This first step includes gathering information that is required before an invoice can be issued. This may include personal data like name, address, or bank account number. It also includes forms for government verification, insurance eligibility status, and authorization.
Step 2: Charge Capture and Billing
Once services are rendered, they are coded and calculated against any insurance coverage or other contractual obligations. For example, in a healthcare scenario, a claim is sent to an insurance company to be accepted or denied.
The correct charge is posted, and an invoice and explanation of charges are sent to the responsible party for payment, along with any notifications.
Step 3: Receivables Management
Next, claim status is edited/updated (if necessary), bills are submitted, and payments are posted. Reminders and collections notices are also sent as needed, and late fees (if applicable) are added to the charge total.
Step 4: Revenue Enhancement
The final step enhances revenue by gathering data into decipherable reports for driving data-backed decisions that move an enterprise closer to its financial goals.
6 Revenue Cycle Management Challenges (and Their Consequences)
While the four steps in the revenue cycle management process seem fairly straightforward, they’re not necessarily simple. Challenges inevitably arise, with the potential to create financial and compliance havoc along the way.
Here are six common revenue cycle management challenges and their potential consequences:
- Not following (or not even having) a financial policy. This can cause compliance issues with government, healthcare, higher education, financial, privacy, and security standards. Management should always implement the most current standards and ensure they are being followed without exception. Without this, your organization is looking at hefty fines and a battered reputation.
- Technological glitches. These are common when multiple systems try to work together. Whether the most current information isn’t in the right place at the right time or one system goes down and affects the rest, managing technology in the revenue cycle can be a struggle. The consequences are wasted time fixing problems and the inability to pay their bills, leaving you with a gap in revenue.
- Lack of staff and/or proper training. Constant turnover and evolving processes make managing change and keeping everyone up to current protocols difficult, time-consuming, and expensive.
- Entry errors. One of the biggest challenges in the revenue cycle is catching and eliminating human entry errors, which is a very labor-intensive management task. Additionally, billing errors frustrate payees and lower customer satisfaction.
- Collecting payments before and/or after services are rendered. This is a task that requires both determination and patience. Managing the balance of those two qualities and their correlating tactics is a task, for sure. But without it, all revenue is lost.
- Reports that are incomplete or incorrect. This can have long-term managerial and financial implications that trickle into every department. They make goals impossible to reach and even have the potential to devastate a company’s financials.
3 Revenue Management Strategies
Since the consequences of improper revenue cycle management can be dire, having a smart, structured, substantiated revenue management strategy is essential. Here are the three most common ways to go about it:
- Do-It-Yourself Revenue Cycle Management: This is the traditional way of managing revenue, but these days, it’s nearly impossible to do on your own. Managing an entire revenue cycle without any professional solutions, especially as you begin or continue to scale, is now too complicated for most businesses to do on their own. Organizations who do try to do it all themselves put in massive amounts of time and effort, only for this strategy to fail. Inevitably, that’s when they decide to call in the professionals.
- Outsource RCM: Having another company come in and take over an organization’s revenue cycle management can be useful. There are some downsides, though, like:
- Ending up with a fragmented administrative process
- Wasting time on misaligned goals
- Having a narrow view of your own data
- Use a Revenue Cycle Management System: This is the revenue management strategy CORE suggests. Having an all-encompassing software solution that you manage and we support gives your organization the best of both worlds. You’ll get the benefits of:
- Total control
- Seamless integration
- A simplified process
- Automated tasks (invoicing, messaging, reconciliation)
- Merchant services
- Resource management (ticketing, events, etc.)
- A complete view into decision-driving data
- PCI compliance and security that exceeds the industry’s highest standards
- 24/7 support from highly trained analysts and solutions engineers
Who Benefits From Revenue Cycle Management?
Among many others, government, healthcare, and higher education are three major industries that benefit greatly from revenue cycle management. The solution is a one-stop, frictionless, secure receipt-to-reconciliation payment and engagement platform that resolves the many challenges throughout the revenue cycle.
Here are some examples of how such a platform can better manage the often complicated and challenging revenue cycle:
- Local, state, and federal government agencies have constituents that want modern, convenient interactions, especially as municipalities continue to evolve. Government agencies need revenue cycle management to simplify payments and boost inbound revenue collections, improving their constituent’s overall welfare and satisfaction.
- Healthcare providers have patients who need positive engagements and private interactions as they make medical billing payments. Providers should use revenue cycle management to simplify payment collections and lead to improved patient and staff outcomes.
- Higher education institutions have progressive students who expect technologically advanced payment solutions and more connected campus. Institutions can use revenue cycle management to optimize inbound income by understanding and appealing to student and family needs.
CORE’s decades of experience and best-in-class solutions have served 1500+ clients with billions of annual payments. We can bring your organization unique project configuration, create efficiencies for your staff, and deliver personalized customer engagement experiences. We’re committed to your success.
To learn more, contact CORE!