Skip to main content

Lack of Automation Proving Costly for Revenue Cycle Operations

Analysis  |  By Amanda Norris  
   September 22, 2022

Automating certain revenue cycle operations could lower health systems' cost-to-collect.

Healthcare leaders who use automation within the revenue cycle reported having an average cost-to-collect of 3.51% compared to 3.74% for those who don't leverage automation. This is according to a recent survey from AKASA that features responses from 556 chief financial officers and revenue cycle leaders at hospitals and health systems across the country.

That .25% difference could potentially save hospitals and health systems millions of dollars.

For example, according to the survey, if a health system has $5 billion in revenue, a cost-to-collect of 3.74 percent without using automation would equal $187 million. If the same health system automated its revenue cycle operations and had a cost-to-collect of 3.51 percent, it would amount to $175.5 million.

This signifies $11.5 million in savings from automating revenue cycle operations.

"Automation is the key differentiator when moving the needle on cost-to-collect and creating large-scale cost savings," Amy Raymond, vice president of revenue cycle operations at AKASA, said in a press release.

"Although healthcare revenue cycle leaders have been trying to reduce the rates for years, studies show cost-to-collect has remained stagnant and this collides with significant financial pressures facing most healthcare organizations," Raymond said.

In fact, those financial struggles were highlighted in the latest National Hospital Flash Report from Kaufman Hall. From June and July of this year, hospitals’ financial performance plunged, following months of improvements, due to declining outpatient revenue, expensive inpatient stays, and decreasing operating room time, the report said.

Hospitals and health systems are experiencing some of the worst margins since the beginning of the COVID-19 pandemic, putting 2022 on track to become the worst financial year for the healthcare sector since the crisis first started.

These financial pressures are pushing more revenue cycle leaders to cut costs, many of which are looking toward automation as a solution.

“Automation is the key differentiator when moving the needle on cost-to-collect and creating large-scale cost savings.”

Amanda Norris is the Revenue Cycle Editor for HealthLeaders.


KEY TAKEAWAYS

Healthcare leaders who use automation within the revenue cycle reported having an average cost-to-collect of 3.51% compared to 3.74% for those who don't leverage automation.

Automating revenue cycle operations could equate to $11.5 million in savings.

Cost-to-collect has remained stagnant and this collides with significant financial pressures facing most healthcare organizations.

Overall financial pressures are pushing more revenue cycle leaders to cut costs, many of which are looking toward automation as a solution.


Get the latest on healthcare leadership in your inbox.