How to Maximize Revenue Cycle Strategy for Financial Success

June 05, 2023 - According to a recent MGMA poll, 40 percent of medical practices failed to achieve their revenue goals in 2021. Respondents highlighted several major challenges, including staffing shortages, rising expenses, and delayed reimbursements from payers.

As healthcare providers prioritize implementing effective revenue cycle management strategies to address this widespread shortfall in revenue goals, it is crucial they begin focusing on the fundamentals of revenue cycle management to maximize their financial success. It is easy for providers to get caught up in the semantics of revenue cycle strategies and dilute their revenue return. Outlined below are carefully designed strategic measures aimed at optimizing financial performance, streamlining operations and achieving revenue growth.

Define the organization’s goals

The first step is to set realistic goals. Begin by outlining what successful goals look like by defining the new revenue cycle height for the practice. Organizations should specify the expected results and decide if the right changes are being made to reach these new goals.

While thinking about this preferred future, it is important to be realistic, as these new goals should be attainable within one’s current capabilities.

Analyze the current financial and operational state

Once goals and the desired future of the practice’s revenue cycle have been established, the next step is to conduct a thorough analysis and audit of the practice’s current financial and operational status.

Start by identifying key performance indicators (KPIs), as they differ from provider to provider, and other defining measures of success. These metrics will paint an accurate picture of various aspects of the practice, including staff and provider productivity, rejection rates, and denial rates. This data-driven approach will enable practices to identify their strengths and areas for improvement, allowing them to implement targeted strategies.

Review current policies and procedures

When goals and KPIs are fully outlined, it is important to look at the current policies and procedures governing the operation of the practice. Policies and procedures should align with the new initiatives. Identify the current process for working on denials and rejections and ensure there is a proper workflow to minimize errors and streamline procedures.

If the processes are outdated or undocumented, create new ones that incorporate the voices of department leaders at the practice for cross-functional efficiency. Once approved by the key stakeholders, educate the team to ensure everyone is aligned.

Additionally, it is key to create a review cadence to help providers continually improve processes that help minimize errors, reduce gaps in workflows, and streamline cash flow.

Understand how to maximize your revenue

To effectively understand and make necessary adjustments to the revenue cycle, it is crucial to analyze the reasons behind these adjustments. Assess whether procedures are medically unnecessary and identify any services that do not receive proper reimbursement, as this can impact the financial health of the practice.

On top of that, it is essential to have a deep understanding of the return on investment for each claim. Not all claims are equal, so prioritize those with a higher return. Consider the opportunity cost of having the team work on a project and choosing not to pursue another project that could potentially yield higher returns, such as chasing claims with a greater likelihood of reimbursement.

Lastly, recognize the variations among different payers, as each has its own requirements. It can be beneficial to designate a team member to specialize in understanding these differences and educate the rest of the team accordingly. This ensures that revenue cycle management strategies align with the specific requirements of each payer, optimizing reimbursement and financial outcomes.

Assess the billing team

Finally, organizations should review the quantity and quality of the work of the billing team. Pinpoint where more training and upskilling may be needed and if staff members can balance their workload. If workload balance is a concern, consider bringing in a revenue cycle partner for consultation and to share their expertise on revenue cycle management to help expedite learning and improvement.

Additionally, organizations should consider putting leaders and staff on different committees based on strengths. These internal teams will monitor separate aspects of revenue cycle management to allow for continuous communication of any nuances or regulatory changes regarding claims.

By taking an in-depth review of one’s current operations and understanding the critical benchmarks for improvement, practices can create a baseline to measure success. These foundational tactics enable providers to minimize their risk of denials, improve cash flow, and strengthen their relationships with payers and patients so they can focus on delivering high-quality patient care while building a better financial future.

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Article Contributer: 

Marvin Luz, Senior Director, Greenway Revenue Services, Greenway Health