No matter the size of your practice, the revenue cycle begins when the patient sets an appointment and ends when your practice receives payment. What happens in between is what often sets successful practices apart from unsuccessful ones.
The better you are able to manage your practice’s revenue cycle the more likely your practice will succeed and grow. Conversely, the worse you manage your revenue cycle, the more likely your practice will struggle.
How can you ensure that you are properly managing your practice’s revenue cycle? Let;s examine five signs of an unhealthy revenue cycle along with potential remedies for each.
- Too Many Open Appointments – As stated above, the revenue cycle begins with a set appointment. Too many open appointments results in less incoming revenue. Another related issue is too many missed appointments, which we covered HERE.
Potential Remedy: Review your current scheduling practices. Make sure that it is easy for patients to schedule and reschedule if necessary. Send out appointment reminders to ensure patients show up for their next appointment. If you do not currently use a scheduling software consider looking into one that can help you manage this.
- Too Many Denied Claims – A denied claim means that there will be a delay in payment – if there is payment at all. Too many denied claims will result in lost time (chasing the claim) and potential lost revenue).
Potential Remedy: Verify payment upfront. Make sure that you have the correct insurance information on file for the patient or discuss their method of payment at the time the appointment is being made.
- Too Many Mistakes – Coding mistakes often result in denied claims and delayed payments. The thing that makes this particularly insidious is that the time correcting mistakes is hard to track. As the saying goes, “Time is money”. Even though the mistake that caused the delay may be fixed and payment is eventually achieved, there is a loss of time and money.
Potential Remedy: Hire outside help. This may seem self-serving and you may not believe you can afford to outsource your billing, consider the time lost tracking down and correct mistakes. Also consider the times when a mistake was NOT caught and you under billed a claim, lowering your reimbursement. Chances are when you look closer at the numbers, you may end up SAVING money by outsourcing your billing.
- Too Many Outstanding Balances – A short revenue cycle is best for your practice. Each outstanding balance makes your revenue cycle longer. The bottom line is that you have less incoming revenue which will eventually negatively impact your practice.
Potential Remedy: Have a payment policy that is clear to your patients and try to collect payment at the time of the appointment. Additionally, try to give you patients multiple methods of payment.
- Too Much Uncertainty – The only way for you to know what is going on with your revenue cycle is to actually study it. If you do not know key performance indicators (KPIs) such as time claims spent in accounts receivable, first-pass acceptance rate, or denial rate then it is hard to make important decisions about your practice.
Potential Remedy: You do not have to know these KPIs off the top of your head, but you should have a way to look them up when you want to better understand your revenue cycle. There are analytics tools where you can monitor these stats as well as others. If you are currently outsourcing your billing, or considering doing so, ask the business you are working with if they provide reports that you can review.
A healthy revenue cycle is the foundation for a success practice. If you can properly manage your practice’s revenue cycle, then you will be setting up your practice for long term success. If you need any help understanding your revenue cycle, please contact Mednet today!