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Four Common Problem Areas in Revenue Cycle Management

 |  By HealthLeaders Media Staff  
   September 17, 2009

Revenue cycle management is the backbone of a profitable medical practice. Many physicians struggle with the idea that they are businessmen as well as medical professionals, and are continually looking for ways to improve practice operations.

Below I have outlined four of the most common problem areas for physicians when it comes to revenue cycle management. These issues can be problematic on both a small and grand scale, and offer areas of opportunity for physicians to improve their revenue stream.

1. A disconnect between the physician and office manager. The lead physician should be fully committed to engaging in the revenue cycle process, even if a competent office manager is on staff. Bi-weekly meetings should occur between the physician and financial staff to review billings, collections, and office revenue to help ensure a "top-down" approach to maintaining practice operations.

Without this high level of "executive sponsorship," a disconnect can form over time between the physician and the financial state of the practice. Small problems can quickly turn into large ones. On a recent evaluation, we determined that a group practice was losing $350,000 a year—20% of the practice income—in flawed business processes related to rejected claims, unaccounted payments, and timely turnaround. None of these problems were unmanageable individually, but over time they had gotten away from the office manager and led to the practice losing a significant portion of its overall revenue.

In addition, should the physician choose to implement a new technology or process in the cycle, many times an office manager will lead the effort and then be involved in a back-and-forth on some important issues with the physician(s). This can lead to inefficiencies in the process, extended timelines, and slower adoption by the staff. With a fully engaged physician, it becomes clear that any changes or improvements are of the utmost importance to the overall success of the practice and that the entire team needs to be on board.

2. Untimely follow up in A/R, or no follow up at all. It may seem surprising that many practices would leave money sitting on the table, but that is exactly what they are doing when there isn't diligent follow up on A/R. Lagging collection times, inconsistent follow up, and improper insurance coordination all contribute to a "slow leak" of revenue.

In the aforementioned evaluation, by implementing thorough and consistent A/R processes, the practice was able to reduce A/R from $385,000 outstanding to $68,000.

Physicians should also be careful not to take excessive write offs that make A/R look favorable at the expense of overall income. If this is a current policy, or it is discovered to be a current policy of the office manager, this practice should be immediately discontinued. While it may be an attractive short term solution, it is not healthy for the longterm sustainability of the practice.

3. Lack of staff education. At a minimum, each member of the staff should be trained as to how their role fits into the overall revenue cycle. Front end reception should be diligent about collecting co-pays up front at the time of the patient's visit. Inaccurate coding can cost the practice tens of thousands of dollars a year. Technologies like card scanners to reduce data entry errors, and billing automation to provide reception access to patient financial information, are helpful tools in capturing every available dollar.

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