Published: Jan 27, 2025
Updated:
Revenue Cycle Management

Revenue Cycle Operations: 4 Approaches MSOs Can Use to Enhance RCM

Suzanne Long Delzio
Suzanne Long Delzio
8 minute read
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Facebook founder Mark Zuckerberg recently said,

“I’m here to build something for the long-term. Anything else is just distraction.” 

After the tough years of the COVID pandemic, the long-term is finally starting to look good for U.S. healthcare. 

When consulting giant Deloitte surveyed 80 healthcare leaders at large ($500 million in revenue) health systems, 59% expressed a favorable growth forecast – up from 52% the previous year. 

Further, according to their recently published US Healthcare Outlook, 71% of respondents anticipate improved profitability this year. 

This is all encouraging news! 

At the same time, 65% of these executives cited the need to develop growth strategies for their organizations as a top priority for this year.

MSOs that are determined to create a stalwart company must make careful, strategic decisions about revenue cycle operations. Operational strategy sets a clear course of action for the company, guides decision-making, and helps prioritize initiatives and resource allocation. 

How will you improve your revenue cycle operations this year? Explore the extent of your choices here to build the firm foundation that allows you to capture opportunities ahead.

What are revenue cycle operations? 

Revenue cycle operations are the broader execution and management of each of the revenue cycle’s 12 processes from patient registration to final payment posting. In other words, they are the strategies hammered out to guide each process.  

Differences between revenue cycle operations and revenue cycle processes

While revenue cycle operations and revenue cycle processes are closely related concepts in healthcare revenue cycle management (RCM), there is a subtle difference between the two:

Revenue cycle processes refer to the specific steps and procedures that make up the entire revenue cycle in healthcare. They form the backbone of the revenue cycle. Revenue cycle operations provide the guidance that dictates each process.  

It’s the MSO executive’s job to provide this guidance in several areas.   

Centralized RCM operations v. decentralized operations

Some MSOs prefer to immediately centralize all operations. Our guide RCM for MSOs encourages this approach. Still, others – especially those handling several different specialties or different states – choose a decentralized approach.  

By choosing centralized operations, MSOs consolidate all revenue cycle functions into a single, unified system where all financial processes are managed from a central location. MSOs standardize processes and systems, including company-wide PM and EMR integrations. The centralizing MSO drives to organize data in one location, thereby improving its accuracy and integrity. 

Benefits of centralization include:

  • improved efficiency and reduced redundancies
  • enhanced data analytics capabilities
  • better vendor management and cost optimization
  • streamlined communication across the organization
  • a unified patient financial experience 

Less common for MSOs, decentralized operations allow individual entities within the MSO to maintain separate billing and revenue cycle processes. When the best approach is to give local teams autonomy in decision-making, the MSO may choose decentralization. For instance, each practice or location may manage its own revenue cycle functions. When location processes are fundamentally different, allowing unique processes could be the path to improved revenue.  

Decentralized operations can offer:

  • greater flexibility for individual practices
  • faster response to local market conditions
  • preservation of existing workflows in acquired practices

Most healthcare thought leaders see centralization as the preferred approach for MSOs, as it allows for greater operational excellence, better cost containment, and efficiency in an increasingly complex healthcare landscape.

Regardless of the chosen approach, MSOs are focusing on leveraging technology, automating processes, and implementing data-driven strategies to optimize their revenue cycle management and drive value creation.

AI and automation in RCM Operations

The COVID pandemic has catalyzed technological innovation in revenue cycle management, pushing healthcare organizations to rapidly adopt AI, automation, and data analytics solutions. These advancements are reshaping RCM processes, making them more efficient, resilient, and patient-centric in the post-pandemic era.

Of course, any software company will guide you through how their AI and automation can speed and streamline your processes. The use of AI in RCM and robotic process automation is all the rage these days, and most healthcare systems have incorporated both at least in eligibility and claims submission (there are a lot more neglected revenue processes that need both, however.) Before you get that granular, evaluate your team’s idea of just how technology will improve your operations and revenue. 

The use of AI and automation in healthcare operations is a rapidly evolving field with various approaches and perspectives. Healthcare organizations are adopting different strategies to modernize their systems and improve efficiency. At this time, organizations are taking one of two paths in entering the digital era via AI and automated technologies. 

Updating legacy RCM systems v. onboarding end-to-end solutions 

Many healthcare organizations are opting to improve their existing legacy RCM systems with small additional automations. Others choose to start from scratch by incorporating entirely new RCM technology systems. 

Today, approximately 73% of healthcare organizations still rely on legacy systems for core clinical operations. These organizations successfully modernize by integrating “point” or “bolt-on” solutions that handle one aspect of the revenue cycle, possibly contract management, prior authorizations, or coding. They connect legacy systems with newer technologies through APIs. 

 Using a point solution leaves functional, even optimal revenue cycle processes in place while adding better functionality in two or three areas. 

For instance: 

  • When a women’s health physician group automated the generation and send of good faith estimates after the 2022 No Surprises Act, it saved $172,000 to $344,000 – the cost of four to eight additional revenue cycle staff members. 

These two organizations were already satisfied with the solutions that targeted payment posting, medical records, and more. 

Benefits of modernization via a point solution approach include:

  • cost-effectiveness compared to complete system replacement
  • minimal disruption to existing workflows
  • preservation of valuable historical data
  • flexibility in vendor choice and changes

End-to-end RCM solutions, on the other hand, bring a level of consistency not provided by point solutions. This approach allows for the adoption of cutting-edge technologies without the constraints of legacy infrastructure. It also enables healthcare providers to leverage advanced features like AI-driven analytics and cloud-based solutions. Still, end-to-end solutions disrupt the entire revenue cycle.

Benefits of an end-to-end approach to revenue operations modernization includes:

  • customer service priority
  • staff training consistency
  • avoidance of duplicate efforts and processes

The bottom line is that healthcare organizations must enter the digital era to remain viable. Using either point or end-to-end solutions will get you there. Unfortunately, today, 85% of CFOs and senior leaders still feel they have inadequate digital transformation in their finance divisions to secure the commercial stability and long-term survival of their organizations. The 2024 Black Book RCM user survey asked over 6,000 healthcare professionals to reach this conclusion. 

Your cloud-based RCM operations strategy

The trend toward locating RCM operations in the cloud will accelerate this year. 

These systems improve operational efficiency through automation, AI integration, and real-time data access, leading to faster claims processing, reduced errors, and improved cash flow. Cloud-based RCM also enhances data security and compliance with industry regulations like HIPAA, addressing critical concerns in healthcare. Furthermore, these solutions facilitate better patient engagement through features like online portals and self-service options, potentially increasing patient satisfaction and timely payments. 

By transitioning to cloud-based RCM, healthcare organizations can reduce IT costs, improve interoperability with other systems, and gain access to advanced analytics for better decision-making, ultimately leading to improved financial performance and patient care delivery.

MSOs need to decide between integrating cloud capabilities with current systems and implementing entirely new cloud-based RCM solutions. 

The advantages of a hybrid approach (integrating cloud capabilities with legacy systems) include abilities to:  

  • minimize disruption to current workflows
  • avoid the high costs associated with complete system replacement
  • gradually adopt cloud technologies at your own pace
  • scale resources up or down based on demand
  • maintain control over sensitive data while leveraging cloud benefits

On the other hand, moving all RCM operations to the clouds can bring:

  • enhanced efficiency: streamlined workflows and automated processes
  • scalability: easily adjust resources based on patient volumes
  • improved data management: real-time access to patient data and financial insights
  • advanced analytics: better identification of revenue opportunities and risks
  • enhanced security: more robust data protection and compliance measures
  • remote accessibility: access RCM data and tools from anywhere, anytime

Regardless of the approach, the trend towards cloud-based RCM is unstoppable, promising improved revenue cycle operations, financial performance, enhanced patient care, and greater adaptability in the dynamic healthcare environment.

Revenue cycle operations and workforce management

The efficiency of revenue cycle processes is heavily dependent on the skills, productivity, and engagement of the workforce managing these operations.

One key area of intersection is in performance analysis and optimization. Workforce analytics in revenue cycle management involves monitoring employee performance metrics such as claims processed per day, coding accuracy, and billing turnaround times. This data-driven approach allows organizations to identify high performers, areas needing improvement, and opportunities for process streamlining. 

Additionally, workforce management strategies directly affect staffing levels and skill mix in revenue cycle departments, which in turn influences the organization's ability to handle workload fluctuations, reduce denials, and maximize reimbursements.  

Healthcare organizations use one or a hybrid of workforce management styles. These three intersect with revenue cycle operations.  

Continuous Improvement Management

Continuous Improvement Management or CIM focuses on constantly enhancing the quality of patient care and extending improvements to all departments. It involves:

  • gathering input from stakeholders, including patients and family members
  • setting key goals based on feedback
  • designing system analysis around these goals
  • training staff to collect and interpret data
  • strategizing improvements based on collected data

CIM's emphasis on gathering input from stakeholders, including patients and family members, helps align operations with patient needs, improving patient satisfaction and outcomes, enhancing the overall quality of care, and driving operational changes that directly benefit patients.

Furthermore, the holistic approach of CIM encourages collaboration across different departments, leading to better coordination in operations, sharing of best practices, and more comprehensive solutions to operational challenges. This interdependent relationship creates a virtuous cycle where improved operations facilitate better continuous improvement initiatives, which in turn lead to further operational enhancements, ultimately resulting in higher quality patient care, increased efficiency, and a more responsive and adaptive healthcare system.

Plan-Do-Study-Act (PDSA) 

The PDSA model is widely used for rapid cycle improvement in healthcare. It mirrors the scientific method, providing a structured framework for developing, testing, and implementing changes. This approach moderates the impulse for immediate action with careful study, ensuring that improvements are evidence-based and effective.

The model enables quick testing of changes on a small scale, allowing healthcare teams to learn from each cycle and make adjustments before full-scale implementation. This rapid-cycle testing leads to faster improvements and reduces risks associated with large-scale changes.

PDSA involves:

  • planning changes
  • implementing changes on a small scale
  • studying the results
  • acting on what was learned 

The PDSA cyclical process allows for continuous refinement of RCM operations, leading to increased efficiency, reduced errors, and improved financial performance. The emphasis on data-driven decision-making and rapid iteration makes it particularly effective in the dynamic healthcare revenue cycle environment, where regulations and payer requirements frequently change. 

PDSA approach's emphasis on data-driven decision-making and rapid iteration makes it particularly effective in the dynamic healthcare revenue cycle environment, where regulations and payer requirements frequently change. 

Lean Six Sigma

The Lean Six Sigma workforce management approach helps healthcare MSOs focus on continuous improvement and waste reduction. This methodology is unique in that it empowers employees at all levels to identify and solve problems, fostering a culture of innovation and engagement. Additionally, Lean Six Sigma's data-driven approach allows healthcare organizations to make informed decisions, optimize resource allocation, and adapt quickly to changing industry demands. Ultimately, adopting Lean Six Sigma can help MSOs enhance their service quality, reduce costs, and maintain a competitive edge in the rapidly evolving healthcare landscape. 

Lean Six Sigma includes:

  • process mapping and value stream analysis 
  • statistical analysis and data-driven decision-making  
  • continuous improvement initiatives that empower employees to identify and solve problems in their daily work
  • implementation of standardized procedures 
  • quality control measures  
  • regular performance monitoring  

A Lean Six Sigma workforce management approach enhances operations by streamlining workflows, reducing redundancies, and automating repetitive tasks, leading to faster claims processing and improved cash flow. This approach helps reduce operational costs by eliminating waste and improving efficiency in administrative tasks.  

Continuous Improvement Management, PDSA, and Lean Six Sigma are all powerful approaches for enhancing workforce management and operational efficiency in healthcare MSOs. While each methodology has its unique strengths, they all share a common focus on data-driven decision-making, employee engagement, and ongoing process optimization. By carefully selecting and implementing the most appropriate approach—or a combination thereof—healthcare organizations can significantly improve their RCM operations.

Let MD Clarity support your RCM operations improvement strategies

M&A consultants from PWC share that while health services deals declined by 9% last year, with a new administration increased deal activity is on the horizon. This optimism is informed by the high levels of capital held by both private equity funds and corporates as well as the prospect of further interest rate cuts.

Still, it will take streamlined and efficient revenue cycle operations to build a dominant MSO. 

MD Clarity has established a stellar reputation for optimizing revenue cycle operations. Its RevFind contact management and monitoring tool optimizes financial performance and patient experience by centralizing contracts and digitizing terms and fees. This centralization enables staff to access critical data, ensuring full reimbursement as per payer contracts and identifying underpayments. The platform also benchmarks reimbursements against national standards like Medicare. Its analysis feature provides contract performance metrics for each payer, empowering you to negotiate better rates using competitive intelligence.

 Request a demo to witness how our automation and operational efficiency solutions benefit healthcare organizations. 

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