Value-based Programs

Exploring the Purpose of revenue cycle management in Healthcare – 2023 Updated Guide

As the healthcare industry is much inclined towards providing healthcare to every patient, it is equally necessary to maintain a successful revenue management cycle. As technological advancements are chipping in, effective healthcare revenue cycle management has become the need of the day. Often the health practitioners are of the opinion that what is the purpose of revenue cycle management in healthcare.

According to a report from Sage Growth Partners, more than a third of health systems have faced more than $10 million in bad debt annually. The situation is worsening due to unpaid bills and every year up to $125 billion is lost in unpaid and underpaid claims. This is why an increased number of healthcare providers are seeking the help of revenue cycle management providers to revamp and automate their revenue collection process, and to receive the immense benefits of revenue cycle management in healthcare.  

Healthcare Revenue Cycle Management (RCM) is the process of managing the entire revenue cycle of the healthcare providers and making sure that there is no delay due to redundant tasks and revenue collection leaks. The RCM process starts with the patient scheduling a visit, receiving the care and concludes with making payment to the care services provider. The process can be enlisted as:

  • Patient eligibility check and insurance authorization
  • Medical coding and billing, charge capture
  • Claim preparation and scrubbing
  • Claim submission
  • Payment posting
  • Denial management
  • Account receivable follow-ups
  • Patient statements
  • Reporting and audit

Revenue cycle management (RCM) in healthcare serves as the central process that streamlines the processes, ensures steady collections and makes the healthcare providers financially viable.  

measure rcm

Here are some benefits of revenue cycle management in healthcare: 

What is Purpose of Revenue Cycle Management in Healthcare?

Improved Patient Experience

Effective revenue cycle management eliminates the redundant processes, simplifies the complexities, streamlines the system. This lowers the administrative burden of the care providers and they focus more on delivering quality care services. Efficient revenue cycle management with the automation of the processes improves all the touchpoints of a patient journey and concludes the process with timely payments. 

Reduced Administrative Burden

Although the RCM process runs along with the patient walkthrough but managing it is a complete job that requires focused attention of the revenue cycle management resources. This is why most of the healthcare services providers seek services of the professional RCM vendors that can effectively manage and automate their revenue cycle. By outsourcing and automating the revenue cycle, healthcare providers can set them free from different administrative tasks which include resource management, billing, and coding, managing the claim preparation and reimbursement process. More availability of time helps them focus on delivering quality care. 

Elimination of Errors and Redundancy

Mostly RCM vendors also provide medical billing and coding services. Delay in the collection process occurs due to errors in the billing documents. Medical billing solutions combined with revenue cycle handling helps in eliminating the errors and it removes the redundancy in the system. Error-free billing and collection workflow maximizes the revenues of healthcare providers.  

Fewer Denials

When the revenue cycle is optimized and eliminates the errors in the system, it automatically lowers the denial rate. Payments of the healthcare providers are denied and due to errors in the payment claims and when these errors are removed, it minimizes the denial rate. 

Simplified Processes

Revenue cycle management and automation help in simplifying the front desk and back-office processes. The automation of the system if managed with the right clinical technologies such as the electronic health record (EHR) system, can simplify the workflow. It improves the scheduling process, coding and billing, and payment processing. Removing the complexities in the workflow is a must to improve the operational efficiency of the providers and to make sure that they are meeting their revenue targets.     

healthcare rcm

Maximizes Collections and Revenue

Effective revenue cycle management optimizes the collection process. RCM providers can handle the incumbent tasks along with backlogs such as payment denials and follow-ups, and make sure that the services providers are timely reimbursed. The process brings accuracy to the system and leaves little room for errors. The process if combined with the automation tools and software applications, all the time taking tasks such as insurance verification, coding, and claim processing takes less time than manual handling. An optimized workflow helps in maximizing the collections. 

Faster Collection Process

Revenue cycle automation expedites the collection process by automating the tasks and lowering the administrative burden. When most of the processes are automated, such as the staff is required to enter the patient demographics once, automated eligibility checks, reminders, payment follow-ups and charge entry. The automation and accuracy of the revenue cycle help in faster collections. Providers prepare their bills in less time, and time submission improves the collection process.

Healthcare providers can significantly improve their revenue collections through effective revenue cycle management. For instance, a community hospital in Illinois observed a 300 percent increase in patient collections with the automation and integration of front-end and back-end processes. This is a major leap in the right direction and sets an example for other healthcare services providers.

Managing the RCM in-house can be expensive and involves consistent effort from the management team to manage different resources. With RCM services outsourced to a professional team, providers can focus more on improving the quality of care that can dramatically increase their revenue due to reduced operational cost, elimination of errors, and maximum collections.


Managing the RCM in-house can be expensive and involves consistent effort from the management team to manage different resources. With revenue cycle management companies, providers can focus more on improving the quality of care that can dramatically increase their revenue due to reduced operational cost, elimination of errors, and maximum collections.

Still, wondering to improve the revenue cycle management of your organization? We are here to guide you further. We ensure every possible experience you might want to have to beneficially run your revenue management cycle. So you can focus on providing the best healthcare to your patients.