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Key Performance Areas for Your Hospital Revenue Cycle Management

by Emily Jones
hospital revenue cycle management

The revenue cycle is the process of converting initial sales orders to eventual cash revenue. With the hospital revenue cycle management, you have the option to divide into two phases, the physical phase of transferring goods or services to customers and the financial phase of receiving cash from customers.

When you can encompass various revenue-generating activities, the revenue cycle represents a significant part of the hospital’s operation. Therefore, the revenue cycle performance can affect the hospital’s process. Yet, it equally affects the overall performance.

When you analyze revenue cycle performance, the organization can locate underperforming areas and implement better control measures. By analyzing revenue cycle performance, a service provider can identify areas for better control measures.

Order approval process

The revenue cycle performance can adversely affect the customer’s orders and other revenue cycle documents. It gets improperly approved by unauthorized personnel regarding prices, special rates, discounts offered and other sales terms.

The hospital revenue cycle management performance focuses on customer service to ensure that sales contracts are accepted with management knowledge and that no unauthorized price quotes are provided to customers. In addition, the review process should decide whether the credit terms granted represent unacceptable credit risks to the business.

Inventory control and order fulfilment

Once the healthcare firm receives a customer directive and management at the appropriate level and has been approved, the debt collection agency will report the needs on a timely basis. Besides, it alerts the inventory department for preparing the requested service based on the demand schedules.

The inventory personnel will go through inventory stock status to fulfil the needs. If the requested service fails to meet demand, they should quickly generate back support as a part of the service. Now, how well the inventory department carries out its tasks and follows work procedures affect the revenue cycle performance.

Efficient billing invoices

The financial phase of the revenue cycle starts with billing customers for the products or services they have received. Therefore, billing should be complete, accurate, and recognized when consumers go for a payment. Besides, there are certain risks associated with billing, especially in terms of the accuracy and timeliness of the invoice generated.

In order to control risk, a firm must conduct detailed checking on billing invoices against service. Invoices may be billed from unauthorized information sources. Meanwhile, inaccurate or untimely billing may lead to payment delays.

Measure A/R collection

One of the most significant areas of concern that hospital revenue cycle management emphasize is the ineffective collection of accounts. It would be best to keep in mind that the longer accounts receivable stay outstanding, the weaker the cash-conversion ability. Now, this reduces the liquidity of the A/R.

The analysis of accounts receivable often involves measuring the turnover ratio. This is generally the amount of sales divided by the average accounts receivable outstanding during the year. Besides, the faster the accounts receivable turns over to cash, your business service is more successful.

Validate cash payment receipts

Receiving cash payments at the end of the revenue cycle is a positive point. However, all cash receipts must be recorded periodically and accurately applied to customer accounts. To validate cash payment receipts, your business must compare cash receipts first approved as valid before their posting to customer accounts.

Final Wrap

Inaccuracy and incompleteness in managing cash receipt records risk missing out on your collection. It’s best to get help from hospital revenue cycle management and the overall revenue generation procedure efficiently. Get in touch with professionals today, and we’ll help you explore boundaries.

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