Revenue Cycle Management Challenges in 2024: How Healthcare Providers Can Tackle the Top 6

Healthcare leaders lament that providers are pulled between capturing the efficiency and cost-saving promise of digitization and technology while working hard to serve the patients standing at their front desks. You must modernize, and yet that takes money and you must show profit to attract the new investment that keeps you serving your community and funding new digital initiatives.

The tremendous changes healthcare organizations navigate now bring unforeseen challenges. You’re up against patients unable / unwilling to pay high bills, climbing denial rates, critical technology decisions in the AI era, technology implementation, and a ubiquitous staffing shortage. 

Forward-thinking (sometimes experimenting) providers address these dire revenue cycle management challenges using proven and as-yet-unproven strategies. Though the upcoming year will present obstacles, cutting-edge innovations promise to help healthcare evolve into a more streamlined, more lucrative enterprise.

Knowing how your peers are addressing the push-pull of revenue cycle expansion v. profit optimization during the great upheaval of healthcare digitization (comparable to the industrial and internet revolutions) not only helps keep your organization current, but also sets you up for long-term success. 

Healthcare RCM Challenge #1: Patient collections

For years, payer denials topped the list of healthcare organizations' top challenges. This year, concern over patient collections has taken that top spot. And for good reason. 

A Crowe, LLP survey of daily transactions from more than 1,600 hospitals and 100,000+ physicians nationwide reveals: 

• the number of patients who owe more than $7,500 tripled from 5.2 percent of all accounts in 2018 to 17.7 percent  

• patient balances higher than $14,000 quadrupled from 4.4 percent of all accounts in 2018 to 16.8 percent  

Both providers and patients struggle with the current healthcare payment landscape. The proliferation of high-deductible healthcare plans (HDHPs) has tossed American consumers into the most medical debt in history. KFF polling finds that 41% of adults have healthcare debt, the highest level of patient debt in the history of the United States.  

Evidence abounds that patient collections are indeed becoming a top stressor. Salucro’s 2024 Healthcare Provider Fintech Insights Report surveying 176 healthcare professionals has 48 percent of respondents pinpointing patient collections as their biggest concern.

In a real-life reflection, a 2024 Kodiak study shows patient collections rates fell from 54.8% in 2021 to 47.8% in 2022 and 2023, a seven percent drop. The company analyzed financial transactions from over 1,850 hospitals and 350,000 physicians nationwide to reach this figure. 

When patients can’t pay (or are confused about paying), it’s up to healthcare organizations to cut a path toward reasonable payments that ensure they get the care they need. For good or ill, the onus for completing patient payments is on providers, as today’s patients have come to expect financial support or at least guidance. 

You can keep  patient accounts out of aging A/R by increasing upfront collections, but you need  good faith and patient payment estimates. Take a quick tour of how you can automate this process here:

A healthcare-consumer-era patient collections strategy

How will healthcare organizations stay viable when they can’t collect from what’s now a significant payer: the patient? Given that research shows patients are now responsible for 30 percent of provider income, collecting from them is critical for your organization’s viability. 

With hundreds and often thousands of dollars on the line, patients have become consumers. They are as discerning and independent as a traveler booking a flight or a tired executive needing the right massage in their area. 

Provide payment transparency

As patients come to terms with paying more for their healthcare, they want to know exactly how much they will be responsible for. You’re not the first to tell them their medical care costs have risen. 

Payment transparency is a must in today’s patient-as-shopper environment. In a study conducted by Experian and PYMNTS, patients who were not provided cost estimates reported lower satisfaction than those who did receive estimates. Similarly, a study by InstaMed reveals that 80% of patients want to know their payment responsibility before receiving care. Front office staff get more comfortable tackling upfront collections head-on when they know what patients want. 

Patient pay estimates in action: 

• A growing radiology practice in the Pacific Northwest with a volume of 200 patients a day struggled with accuracy issues inherent in the manual processing of eligibility, benefits, and cost estimates. After bringing on an automated patient pay estimate solution to compile and send estimates, it increased its upfront collections from 5 percent in 2016 to over 42 percent today.  It also reduced its bad debt by 45 percent, and its denials by 50 percent.
• Three-hospital healthcare organization HealthFirst discovered its low upfront collections were sapping revenue. Without the budget for new hires, they brought on a third-party patient payment estimate solution. Upfront collections increased over 45 percent and days in A/R dropped by 18 percent. Every dollar collected upfront is one kept out of A/R. 

As the demand for cost transparency in healthcare continues to grow, clear payment estimates meet the expectations of discerning patients. They also improve financial outcomes for healthcare providers. Now that consumers are increasingly involved in their care decisions, you can demonstrate that you support their empowered status by delivering the clear financial responsibilities they face. 

Offer digital patient portals

A comprehensive analysis of 3,456 records by the Journal of Internet Medical Research reveals that patients’ convenient access to their records and financial responsibilities benefits both patients and providers. Portals increase patients' awareness of their health conditions and encourage greater adherence to treatment regimens. Additionally, a Salucro Healthcare survey involving 1,348 U.S. healthcare consumers found that 62 percent preferred using patient portals over other methods for settling medical bills. The 2023 State of Patient Access Survey by Experian also highlights that engaging patients through user-friendly self-service portals not only fosters loyalty but also increases the likelihood of them recommending the service to others.

Patient portals in action

• A leading healthcare provider aimed to simplify system access and navigation for its over 10 million consumers by implementing more proactive communication and improving the user experience. It aimed to empower patients to manage their daily healthcare. This step has increased patient ratings by 26%. Further, patients’ total time spent on actions required between scheduling an appointment and completing the visit dropped from 12 hours for an in-person appointment to just two hours for a virtual appointment.  
• Neil Calman, MD, Co-founder, President, and CEO of New York’s The Institute for Family Health, an FQHC felt that patient portals, secure electronic messaging, and other e-health tools would increase patient and family engagement. He shares that even the poorest and those with limited education, “are energized about getting involved” but need access to tools. Portals are central too.  He asserts that, “An underpinning of the Institute’s approach to patient education is “the conviction that everybody is in need of becoming educated and empowered about their own health care decisions.” With a robust patient portal, this organization was able to encourage patients to be more involved and understanding of their medical challenges. 

The compelling evidence from studies and real-world implementations underscores the benefits of patient portals. These digital tools enhance healthcare management by making medical records and financial responsibilities more accessible, thus improving patient-provider communication and efficiency. As healthcare continues to evolve, patient portals will continue to provide an indispensable link between patients and providers. 

Offer flexible, mobile-first payments

Providing patient convenience extends beyond portals. Reaching today’s remote and mobile workers involves text messages and emails. Consumers open text messages  98 percent of the time. 

These communications must also provide links to portals where patients can review health information and pay bills. 

In addition, today’s patients on the go need to be able to pay via options like credit cards, Google Pay, Apple Pay, electronic funds transfer, and payment plans. 

Payment plans are becoming increasingly common in providers’ offices. Demonstrating your willingness to accept payment upfront and subsequent payments indicates your understanding of the burden healthcare expenses place on patients.

Enhancing patient convenience involves more than just access to online portals; it requires integrating various communication methods and payment options that cater to the lifestyle of today’s remote and mobile workers. The effectiveness of text messages, with nearly all being opened, highlights the importance of these channels in engaging patients effectively. Moreover, offering a variety of payment methods, including digital wallets and flexible payment plans, acknowledges the financial pressures of healthcare costs on patients. This comprehensive approach not only improves patient satisfaction and access to healthcare services but also demonstrates a provider's commitment to accommodating patient needs in a changing digital landscape

Healthcare RCM Challenge #2: Climbing Denials Rates

 Payers today deny 12 percent of claims, a 30 percent lift from 2016’s rate of 9 percent. Pacific Northwest providers suffer the most with a denial rate of 17 percent. 

Facing these figures while knowing that 85 percent of denials are avoidable eats away at CFOs and RCM staff.

Your organization is far from alone in the denials fight. 

In the 2023 Plutus Health Revenue Cycle Management Challenges Index, 43 percent of respondents have resolved to make denials their main priority in 2024.  A full 22 percent relayed that their organization loses more than half a million dollars in annual revenue each year due to denied claims. Ten percent of the respondents have $2 million in losses from denied claims. Real money, last time we checked. 

Many spots in the treatment and claims process trigger payer rejection. The majority of denials stem from the lack of / issues with prior authorizations, eligibility, coding and modifiers, deadlines, patient information, claim data, and staff availability. 

Several factors are fueling this rise. 

First, payers facing high utilization during COVID-19 pandemic began scrutinizing claims more closely. They will likely remain vigilant. These hefty profits also help payers afford sophisticated claims processing technology that sifts through their policies and your claims meticulously, finding every last reason to deny. 

Getting your denials lower is possible. We’ve delineated best practices for preventing denials here. 

It takes proactive denial prevention and management to get your patients the care they need and your organization the revenue required to remain viable. The few extra minutes spent on patient documentation, prior authorizations, eligibility, and coding upfront saves 15 in appeal time for each denial. Many now rely on assistance from software automation to help overburdened staff, and even help complete tasks when you lose an RCM staff member, evening out a notoriously volatile workforce.  

Denials management in action

• One large ophthalmology practice reduced its claim denials from 29 percent to 8 percent by using a third-party partner’s ophthalmology billing experts to resolve billing errors.  
• Another health system reduced its denial rate to 2 percent and increased its revenue by 10 percent in five months after using a third-party partner’s trained specialists to streamline documents, detect coding issues using the latest set of ICD-10-CM codes, and more.
• A Pennsylvania-based podiatry clinic reduced denials by 23 percent by conducting eligibility verification at time of service or before. This step also improved patient collections by 25 percent. 
• After struggling with pervasive coding errors, Richmond University Medical Center (RUMC) reduced denials by 30 percent after unleashing a custom-configured software coding solution on denied claims. 

By integrating advanced technologies, relying on outsourcing and process oversight, healthcare organizations can reduce denials. A proactive approach not only preserves vital revenue but also enhances patient satisfaction by minimizing billing-related disruptions. As the industry evolves, adopting these strategies will be essential for maintaining financial health and providing uninterrupted, high-quality care.

Healthcare challenge #3: technology integration

Most likely, healthcare revenue cycle management companies reach out to you every day. Tech geniuses have created powerful software promising to reduce your need for FTEs, streamline your operations, and improve your revenue. Given that you’ve been bringing on software solutions for the past few years, however, the thought of unleashing a new tech initiative on your team is daunting. The average healthcare system may have a stack of technology solutions stacks 10 to 20 vendors deep. With so many systems to manage, many practices never use the full extent of the capabilities the tech geniuses have engineered. 

Then, there’s the interoperability problem. Getting all of these systems to work together required a national movement. A mission-driven non-profit, the Healthcare Information Management Systems Society (HIMSS) has been actively working to advance interoperability among healthcare software systems – a platform crucial for providers looking to modernize their systems, cut costs, and increase revenue.  

HIMSS has been actively working to advance interoperability among healthcare software systems, which is crucial for providers looking to modernize their systems, cut costs, and increase revenue. Their efforts focus on several key areas:

Standards and Testing - HIMSS supports the development and implementation of standardized health IT systems through initiatives like the eHealth Exchange Testing Program. This program tests compliance with health information exchange (HIE) standards, ensuring that systems can effectively communicate with each other.

Collaborative Events -  HIMSS organizes events such as HL7 FHIR Connectathons, where developers and industry experts come together to develop and test FHIR (Fast Healthcare Interoperability Resources) applications in a collaborative environment. These events help promote the adoption of this critical standard, which is fundamental to achieving interoperability.

Certification Programs -  The Office of the National Coordinator for Health IT (ONC) Health IT Certification Program, supported by HIMSS, certifies health IT products. This certification ensures that products meet established interoperability standards and implementation specifications, facilitating their integration into existing systems 

Global and Community Engagement - HIMSS also focuses on engaging a global community through its Global Consortium for eHealth Interoperability. This consortium works alongside governments and national health ministries to harmonize emerging and existing standards to promote global health data interoperability. 

Public Policy and Advocacy - HIMSS actively engages in policy advocacy to push for changes that support broader adoption of interoperable systems. Their efforts help shape health IT policies that encourage the development and use of systems capable of exchanging and utilizing health information across various healthcare settings. 

The above points should establish that interoperability is coming, even if disparate software solutions are not coordinating now. Interoperability will empower healthcare providers to enhance their operational efficiencies and improve patient care outcomes. Getting started imperfectly now sets you up to jump on the leading edge of technological improvements to come. 

IT must lead interoperability initiatives

This is where IT operations play a pivotal role in supporting healthcare systems. ITOps teams are optimizing existing technology investments to increase efficiency and ensure that patient care is delivered seamlessly. A robust ITOps strategy will help with constrained IT budgets.   

Healthcare RCM challenge #4: technology determinations

Adopting new technologies and business models—while under sustained financial pressure—might be the biggest challenge health care executives face in 2024.

Dr. Bill Fera, a principal at Deloitte Consulting LLP, recently urged healthcare leaders to navigate the transition from legacy to digital systems by incorporating generative AI. With some MSOs still standardizing PMS usage and practice groups still working on the kinks in their EHRs, this transition can seem like a dream available only to others. 

Still, making any bold technology strides now sets you up for success for the long term. 

Wasting money is the biggest worry

Sure, healthcare organizations sometimes waste money on technological integrations. But the blame can lie either with you or with the solution. Is your organization at risk for losing on your software solutions? Make sure you have all elements in place to unleash the extent of your software’s functionality. 

Top ways healthcare organizations fail to get value from their technological integrations

Insufficient Training and Support  - Without adequate training, staff may not fully understand how to use new technologies effectively. This lack of proficiency can lead to the underutilization of features that are essential for improving efficiencies and patient care.

Poor Integration with Existing Systems - Technologies that do not integrate well with existing systems can lead to fragmented processes and data silos. This lack of integration can impede the flow of information across different departments, affecting overall efficiency and care coordination.

Lack of Clear Objectives -  Implementing new technology without clear goals can lead to confusion about its purpose and benefits. Get your objectives defined so you can measure success and justify the investment.

Resistance to Change - Change resistance is a common issue in any organization. In healthcare, staff may be particularly hesitant to adopt new technologies due to concerns over job security, disruptions to their routine, or skepticism about the new tools' effectiveness. Read our post about change management to ensure you’re taking positive rather than debilitating steps in introducing new software solutions. 

Inadequate Data Governance - Effective data management is crucial for any health IT system. Without strong governance policies, data quality issues may arise, which can affect patient care and lead to compliance issues.

Underestimating Maintenance Costs and Efforts -  Ongoing maintenance and updates are critical for the longevity and effectiveness of software solutions. Failing to plan for these ongoing costs can lead to outdated systems that compromise patient care and operational efficiency.

Not Aligning with Healthcare Regulations - Compliance with healthcare regulations such as HIPAA in the U.S. is non-negotiable. Software solutions that do not comply with these regulations can lead to significant legal and financial repercussions.

Addressing these challenges requires a strategic approach to technology adoption, including thorough planning, robust training programs, and continuous evaluation of technology performance against set objectives.

Healthcare RCM challenge #5: staffing 

How great would it be to get every patient intake done with accurate data,  see eligibility return within minutes, get 95 percent of claims submitted without any issues, and recoup revenue from commercial payers and patients with little friction?  If you had three staff members genially taking on separate tasks and checking each others’ work, it could be possible. Given today’s RCM staffing shortage, it’s more likely that you have one worker doing the claims and billing work of two. 

Just as it takes figure skaters and musicians 10 hours of daily practice to perform those beautiful, 30-minute pieces, it takes all kinds of behind-the-scenes work to accomplish RCM tasks with precision. 

Working with what you have, consider these approaches to getting your RCM work done: 

Cross-Training - Healthcare providers are increasingly adopting cross-training strategies, where staff are trained to handle multiple roles within the RCM process. This approach not only enhances operational flexibility but also allows for personal development and career growth within the organization.

Remote Work Options - The adoption of remote work has expanded the talent pool and has become a key strategy in retaining employees who value flexibility. This shift has been facilitated by advancements in digital communication and project management tools 

Automation -  Leveraging technology to automate routine RCM tasks such as patient registration, appointment scheduling, and claims processing is another strategy. Automation helps reduce the workload on staff and minimizes human error, leading to more efficient operations and freeing up resources for more complex tasks.

Empowerment and Engagement - Engaged employees are more likely to contribute positively to the workplace, improving both patient care and operational efficiency.

Use of Analytics and AI - Implementing advanced analytics and artificial intelligence in RCM processes helps in making informed decisions, optimizing workflows, and improving financial outcomes. These technologies enable deeper insights into data, which can be used to enhance efficiency and effectiveness across the revenue cycle. 

These strategies are part of a broader movement towards more adaptive and technologically advanced healthcare management practices that aim to improve efficiency and better meet the demands of a changing labor market.

Healthcare RCM challenge #6: healthcare consumerism

As the financial responsibility shifts more towards patients, providers get a demotion from god-status to service-provider. Healthcare organizations now must adopt the same white-glove treatment approach demonstrated by Enterprise Rent-a-Car or Hotels.com. Patient-centric, all the way. Above, where we how you can speed and simplify patient collections, it’s all about patient convenience. 

The consumer-driven healthcare model involves a variety of approaches. Use these to continue to thrive in a patient-centric market. 

Transparency and information access -  Organizations are making pricing more transparent and ensuring that information on the quality and cost of care is readily accessible to patients. Patient payment estimates help consumers make informed decisions about their healthcare. 

Digital tools and patient engagement -  As mentioned above, mobile apps for scheduling appointments, telehealth services, and platforms that allow patients to access their medical records online. Such tools cater to the expectation for convenience and immediate access to health services.

Personalized and Convenient Care Options - Healthcare providers that deliver personalized care (virtual care, diagnostic testing, genetic testing) that involves individual patient preferences and needs will outstrip competitors. These services are not only convenient, even more effective, they help patients manage healthcare costs by reducing no-shows and optimizing resource utilization.

Patient Empowerment Through Education - Educating patients about their health conditions and the available treatment options is another crucial aspect. This empowers them to make knowledgeable decisions about their care and encourages active participation in their health management.

Centralizing the Patient Experience - Make efforts to streamline administrative processes, reduce wait times, and improve the quality of interactions at every touchpoint. Healthcare providers are recognizing that a positive patient experience can influence patient loyalty and satisfaction, which are critical in a consumer-driven market. 

Overall, the adoption of healthcare consumerism is shaping how organizations deliver care, emphasizing transparency, convenience, personalization, and patient engagement to meet the evolving expectations of healthcare consumers.

Navigating healthcare RCM challenges and opportunities in 2024

As health system consolidation picks up again, how will you successfully achieve your organization’s strategic goals this year? Most MSOs, healthcare systems, and provider groups are gravitating toward digitization to streamline their operations, cut costs, and improve net revenue. While modernizing now has some risks, given the staffing shortage and other factors, it's the only route to simplifying and optimizing your operations.  

If you recognize that more patients will be demanding upfront estimations going forward, rest assured that MD Clarity’s Clarity Flow can automate eligibility verifications, generate accurate patient estimates, and send a text or email to the patient delineating their financial responsibility. Having your staff conduct these tasks manually is so time-consuming, it’s unsustainable. Upfront patient payment estimates not only provide the transparency patients want, they give them an easy way to send in a deposit or prepay the entire estimated bill. With patients responsible for more of your income than ever, getting those payments upfront is critical. 

Clarity Flow communicates a clear breakdown of deductibles, copays, and coinsurance. 

The less confusion surrounding the payment experience, the more satisfied your patients will be and the more likely they will be to pay on time and in full.

MD Clarity’s RevFind ingests, digitizes, and analyzes contracts, consolidating them in a single location. It compares every payment to payer contract terms and alerts staff to any discrepancies. Pursuing underpayments can result in millions of dollars in cash recovered and improved margins.

Schedule a demo to see how you can address top revenue cycle management challenges with the automation and insights provided by RevFind and Clarity Flow.

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