Mid-Revenue Cycle Management: How to Measure, Manage and Minimize Leakage

By Fran Jurcak

Executive summary:

Razor-thin profit margins are not a new problem for hospitals. In 2019, one study found that hospital profit margins had shrunk by 21% on average year-over-year.¹

Enter COVID-19. According to an August 2020 KaufmanHall report, hospital margins were down another 28% through Q3, even with funds from the CARES Act and Coronavirus Aid and Relief Funds. If it weren’t for the stimulus relief, hospital margins would have been down 96% on average in 2020.² 

Yes, COVID-19 exacerbated the problem. But it certainly didn’t cause it. 

For many healthcare leaders, the heart of the problem is systemic—leakage from their mid-revenue cycle. In fact, 84% cite inaccurate clinical documentation and coding as the root cause of lost or decreased revenue.³ This is not just a problem with struggling hospitals. Even “average performance” in the mid-revenue cycle was below optimal for those surveyed. In 2019 (pre-COVID), Medicare and Medicaid underpayments reached $75.8 billion.4 

Today, COVID-19 has transformed the landscape of hospitals and health systems. While leakage was a problem before, it was predictable and manageable—thanks to consistent revenue and expenses. But for many hospitals, revenue projections have been completely upended. 

Before COVID-19, mid-revenue cycle leakage impacted every hospital’s bottom line. Now, it can mean negative operating margins. If operating margins remain negative, it can mean anything from downsizing staff and services to diminishing quality clinical care. 

Thankfully, mid-revenue cycle leakage is not an insurmountable challenge. Financial leaders are turning to increasingly sophisticated and automated solutions to overcome leakage, building transformational solutions to ensure organizations are financially resilient for years to come.

Download this whitepaper to learn:

  • Leakage throughout the mid-revenue cycle
  • Strategies to better capture earned revenue
  • The impact of machine learning on mid-revenue cycle leakage 

 

¹ https://www.hfma.org/topics/news/2019/12/hospital-operating-margins-decline-21–in-2019–tracking-firm-fi.html

² https://kha-paywall.readz.com/executive-summary-august-2020?preview=139977

³ HIMSS and Besler Revenue Cycle Management Research Report – Insights into Revenue Cycle Management October 2016

4 2019 AHA Fact Sheet: Underpayment by Medicare and Medicaid January 2021