When a healthcare provider group lacks efficient revenue cycle management (RCM) processes, the result is often carrying unnecessary costs while leaving collections dollars on the table. RCM is too often an afterthought—until symptoms show up in the form of slow and declining cash collections, a liquidity crunch, or unduly RCM expenses.
On the flip side, an efficient RCM function has the potential to improve patient satisfaction while unlocking significant value through EBITDA enhancement. Recurring revenue and cost savings derived from RCM improvements—e.g. 2-5% improvement in Net Collections Rate and 15-30% reduction in cost-to-collect—can ultimately yield margin improvement often hitting 5% or more. So, how do we “unlock the vault”?
Investors and their healthcare portfolio companies can measurably transform their RCM function with three key steps:
- Benchmarking current performance
- Identifying optimization levers
- Implementing target solutions to prevent revenue leakage and enhance performance
Here’s how:
1) Use the “95 & 2” rule to benchmark RCM performance
To evaluate how well current RCM is functioning and understand where the biggest opportunities for unlocking value lie, companies must benchmark their performance, including workflow, productivity, and KPIs.
When it comes to healthcare provider clinic settings, 3 key indicators provide a lens into the initial diagnostic review of RCM. A close look at these key indicators will begin to uncover common problems, which include: